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On Tuesday, Jefferies analyst Rizk Maidi upgraded Assa Abloy (OTC:ASAZY) stock from Hold to Buy, simultaneously increasing the price target to SEK375 from SEK330. The company, a prominent player in the Building Products industry with a market capitalization of $35.3 billion, has demonstrated strong financial health according to InvestingPro analysis. The upgrade comes as Maidi observes signs of a gradual recovery in approximately 30% of Assa Abloy’s business, which he believes is currently at a cyclical low. This is particularly evident in the U.S. renovation and remodel (R&R) sector.
Maidi points to leading and mid-stage growth indicators in the U.S. nonresidential sector, suggesting low to mid-single-digit growth. He also notes that with mergers and acquisitions (M&A) activity contributing over 5% to growth, Assa Abloy’s overall growth excluding foreign exchange impacts could surpass 9%. The analyst appreciates the defensive nature of Assa Abloy’s business and anticipates improved earnings delivery in the near future.
The analyst’s commentary highlights the stock’s approximately 20% year-to-date relative underperformance. Moreover, Maidi sees the current valuation of Assa Abloy shares at the lower end of its historical range as an opportunity for a potential re-rating in the market. InvestingPro data reveals the company has maintained dividend payments for 30 consecutive years and operates with a moderate debt level, with a debt-to-equity ratio of 0.74. Additional insights and financial metrics are available through InvestingPro’s comprehensive analysis platform.
Maidi’s upgrade is set against the backdrop of Assa Abloy’s business performance and market positioning. The company, which specializes in door opening solutions and related services, is expected to benefit from the forecasted growth and strategic acquisitions. The analyst’s positive outlook reflects a belief in the company’s capacity for earnings improvement and a favorable shift in its market valuation.
In other recent news, Assa Abloy has seen several analyst adjustments regarding its stock rating and price targets. Citi upgraded Assa Abloy from a Sell to a Neutral rating, setting a price target of SEK280. This change reflects a revised outlook on the company’s growth potential, particularly in the US construction market. Meanwhile, DNB Markets downgraded the company from Buy to Hold, adjusting the price target to SEK345, citing concerns about the US market and foreign exchange impacts on earnings. Deutsche Bank (ETR:DBKGn) also revised its price target to SEK310, maintaining a Hold rating due to lowered earnings per share estimates influenced by negative foreign exchange movements. The company is expected to report its first-quarter results on April 23, with Deutsche Bank projecting an adjusted EBIT margin of 14.8%, below market consensus. These developments highlight varying analyst perspectives on Assa Abloy’s financial outlook amid challenging market conditions.
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