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On Tuesday, Deutsche Bank (ETR:DBKGn) analysts adjusted their financial outlook for Vesuvius Plc (LON:VSVS:LN), a company specializing in molten metal flow engineering. The price target for the company’s shares was increased to GBP4.15, up from the previous GBP4.00, while the Hold rating remained unchanged.
The revision reflects Deutsche Bank’s anticipation of a year with mixed volume performance for Vesuvius. The analysts predict a 3% year-over-year volume decline in the first half of the fiscal year 2025, which they expect to recover to a 3% increase in the second half, largely due to easier comparisons with the previous year.
For the fiscal year 2025, Deutsche Bank’s EBITDA projections for Vesuvius are concentrated almost entirely within the Foundry segment. The bank’s analysis includes the impact of approximately GBP15 million in tariffs, which is at the higher end of the company’s guidance. Additionally, the forecast accounts for only low single-digit million pounds in direct costs from the Flow Control operations in Mexico and does not factor in any temporary cost savings for the fiscal year 2025.
The analysts also incorporated GBP13 million of further structural cost savings into their model, mirroring the savings achieved in the fiscal year 2024. Despite guidance for EBITDA to be ’broadly similar’ to the GBP188.0 million reported for the fiscal year 2024, Deutsche Bank’s estimate stands slightly lower at GBP186.3 million. The forecast also indicates a 7% decrease in earnings per share for the fiscal year 2025.
The report notes that Vesuvius is expected to maintain strong cash generation, with the models reflecting the company’s target of over GBP400 million in net free cash flow (GBP407 million) from the fiscal year 2024 to the fiscal year 2027. Moreover, the bank anticipates that the company will de-leverage to a net debt-to-EBITDA ratio of 1.0x by the fiscal year 2027. This projection contrasts with management’s statements, which suggest there may be further opportunities for shareholder returns or value-accretive mergers and acquisitions, positioning Vesuvius favorably compared to its peers.
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