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On Wednesday, Kepler Cheuvreux initiated coverage on FLSmidth & Co A/S (FLS:DC) (OTC: FLIDF) stock with a Buy rating and set a price target of DKK448.00. The firm anticipates that FLSmidth will soon become a leading pure-play mining equipment company, following the expected imminent divestment of its Cement division and the completion of the wind-down of non-core activities by 2024.
The firm views FLSmidth’s prospect as an attractive investment, citing potential mid-term growth from mining capital expenditures and margin expansion through self-improvement and increased volumes. The positive outlook is further supported by a decreasing risk profile as the company streamlines its operations.
According to Kepler Cheuvreux, FLSmidth stands out as a market-leading mining equipment, solutions, and services provider. The group's clearly defined strategy and robust balance sheet are seen as key factors that will enable both organic and inorganic growth initiatives.
The analyst highlighted that FLSmidth's focus on its core business, expected revenue growth, margin expansion, and improved cash conversion are likely to contribute to a progressive re-rating of the shares. Currently, FLSmidth's shares are trading at a discount compared to its peers, which suggests a potential upside for investors.
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