Goldman Sachs initiates coverage on Amrize stock with Neutral rating

Investing.com - Goldman Sachs initiated coverage on Amrize Ltd (OTCBB:AMRZ) with a Neutral rating and a $57.00 price target, representing 15% upside potential. The company, currently valued at $27.6 billion, is trading near its 52-week low of $48.01.

The investment bank identified Amrize as a leading North American cement and roofing company that generates industry-leading margins of approximately 40% in its cement business, where it holds the number one market position nationwide with 23% revenue share. With annual revenue of $11.6 billion and a healthy gross margin of 26%, InvestingPro data shows the company maintains strong financial health with a robust current ratio of 2.0.

Goldman Sachs noted that Amrize maintains a strong local market presence with over 50% share within a 150-mile radius, according to the firm’s geospatial analysis, and sees significant runway for continued value-added capital deployment in Building Envelopes.

The research highlighted Amrize’s strategic expansion in the roofing segment through acquisitions at approximately 8 times EV/EBITDA post-synergies, while simultaneously deleveraging through 20 divestitures in emerging markets that raised $10 billion.

Despite these strengths, Goldman Sachs expressed concerns about slowing construction growth and challenging cement industry unit profitability in the medium term, leading to its preference for Construction Machinery over Materials at this point in the economic cycle.

In other recent news, Amrize Ltd has caught the attention of analysts with varying outlooks on its stock. Berenberg initiated coverage on Amrize with a Buy rating, setting a price target of $64.00. The firm emphasized a robust mid-term profit outlook, projecting an average EBITDA growth of 8% per year, driven by a supportive construction market in the US, strong pricing power, and a strategic acquisition approach. Berenberg also noted Amrize’s strong balance sheet, which offers flexibility for further mergers and acquisitions.

Conversely, BofA Securities initiated coverage with a Neutral rating and a price target of $56.00. While acknowledging strong fundamentals in Amrize’s core product lines and significant merger and acquisition potential, BofA highlighted concerns about near-term volume uncertainties in the US market. The firm also mentioned valuation considerations, noting that Amrize stock trades at a limited discount to its Sum-of-the-Parts valuation and at a premium compared to industry peer CRH (NYSE:CRH). These recent developments provide investors with a range of perspectives on Amrize’s potential and challenges.

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