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On Thursday, Deutsche Bank (ETR:DBKGn)’s analysts made adjustments to their financial outlook for ams OSRAM AG ( AMS (VIE:AMS2):SW) (OTC:AUKUF), reducing the price target to CHF 8.50 from the previous CHF 10.00. Despite this change, the firm maintained its Buy rating on the stock.
The revision followed the release of ams OSRAM’s first-quarter report, which was noted for maintaining its free cash flow (FCF) guidance for 2025 at over €100 million, inclusive of net interest paid. This projection holds despite facing challenges such as tariffs and a weaker US dollar. The company also projects a stronger second half of the year, driven by product ramps and seasonal trends.
ams OSRAM announced that it is exploring strategic options for certain assets, in addition to the previously mentioned Kulim2, aiming to raise proceeds significantly exceeding €500 million. This initiative is part of a broader strategy to substantially reduce the company’s leverage. The goal is to slash interest expenses to less than €100 million and bring the net debt/EBITDA ratio down to below 2x, compared to a trajectory that would likely reach 3.3x by the end of the year.
The analyst’s commentary highlighted the positive reception of the anticipated proceeds’ magnitude. However, it also pointed out that investors might remain skeptical due to the potential difficulties in finalizing such agreements in the current economic climate. The strategic review of ams OSRAM’s assets is a key component of the company’s comprehensive plan to reduce debt and improve its financial position.
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