On Tuesday, Deutsche Bank (ETR:DBKGn) adjusted its price target for Assa Abloy AB (ASSAB:SS) (OTC: OTC:ASAZY), the Swedish lock manufacturer, from SEK305.00 to SEK315.00, while maintaining a Hold rating on the stock. This adjustment comes ahead of the company's fourth-quarter results, which are scheduled to be announced on February 5.
The bank anticipates a modest 1% organic sales growth for Assa Abloy (ST:ASSAb), with an adjusted EBIT margin of 16.4%, representing a 90 basis points increase year-over-year and 20 basis points above the consensus. The forecast also includes an expectation that the company's Board will propose a dividend of SEK5.9 per share for the year 2024, which is an increase from the previous dividend of SEK5.4 per share.
Looking forward to 2025, the analyst predicts that Assa Abloy's management will not provide specific guidance, which is consistent with their usual practice. However, they are expected to reveal details about the next manufacturing footprint program, MFP10, which is set to be recorded in the first quarter of 2025.
In terms of valuation, Assa Abloy's stock is currently trading at 16.7 times enterprise value to EBITA (EV/EBITA) and 22.2 times price to earnings (P/E) based on Deutsche Bank's 2025 estimates. The decision to retain a Hold rating is based on these valuation grounds. Deutsche Bank also notes a preference for Legrand (EPA:LEGD) within the construction-related sector, citing its current price of EUR 96.84.
The price target increase to SEK315 from SEK305 by Deutsche Bank reflects adjustments made to their estimates based on foreign exchange considerations and the rolling forward of their valuation method.
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