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On Thursday, Barclays (LON:BARC) upgraded De’ Longhi SpA (DLG:IM) stock from Underweight to Equalweight, while also lifting its price target to EUR30.00 from the previous EUR23.00. The revision by Barclays comes after De’ Longhi’s recent announcement during its Q1 2025 results, where the company adjusted its expected tariff impact on FY25 EBITDA to the lower end of their initial EUR15-20 million estimate, despite tariffs being worse than anticipated in March 2025.
De’ Longhi had previously forecasted a significant tariff impact on its earnings before interest, taxes, depreciation, and amortization (EBITDA) for the fiscal year 2025. However, the firm has demonstrated a conservative approach to assessing its tariff exposures, revising the expected impact down to approximately EUR15 million. This conservative revision was made even as current tariffs in Europe and China remain higher than what De’ Longhi had anticipated following rollbacks.
Barclays noted De’ Longhi’s strong financial position, highlighting its valuation at roughly 7 times its forecasted FY25 enterprise value to EBITDA ratio. The company’s balance sheet appears robust, with around EUR400 million in net cash and a free cash flow of EUR300 million. The firm’s management also received praise, particularly after Barclays’ analysts spent time with CEO Fabio De’ Longhi during London Coffee Week, gaining confidence in the leadership’s capabilities.
The upgrade reflects Barclays’ inability to identify a clear risk to De’ Longhi’s earnings per share estimates for FY25 and FY26. This, coupled with the company’s inexpensive valuation and the positive thematic of growing coffee culture, contributed to the analyst’s decision to adjust their stance on the stock.
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