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On Wednesday, JPMorgan reaffirmed its Overweight rating and EUR70.00 price target on Akzo Nobel NV (AKZA:NA) (OTC: OTC:AKZOY), a $10.1 billion market cap specialty chemicals company. According to InvestingPro analysis, the stock is currently trading below its Fair Value, with a P/E ratio of 17.3x and an impressive 33-year track record of consistent dividend payments. Despite acknowledging the company’s fourth-quarter results could be seen as underwhelming. The market anticipated stronger performance, particularly in adjusted EBIT and free cash flow (FCF), which fell short of expectations. However, Akzo Nobel (AS:AKZO)’s guidance for fiscal year 2025 suggests an adjusted EBITDA of over EUR1.55 billion, which aligns with JPMorgan’s and consensus estimates, and is supported by nearly EUR70 million in net cost savings—significantly higher than JPMorgan’s initial estimate of around EUR15 million. The company maintains solid fundamentals with a gross profit margin of 40.8% and annual revenues of $11.8 billion. Want deeper insights? InvestingPro subscribers have access to over 30 additional financial metrics and analysis tools.
The company’s forecast for the first quarter of 2025 indicates a slight year-over-year decrease in adjusted EBITDA, which is consistent with JPMorgan’s expectations but falls 7-8% below the Bloomberg consensus. Despite this, it is believed that the buy-side had already adjusted their first-quarter consensus to account for the anticipated decline.
Akzo Nobel has increased its cumulative cost savings targets linked to existing programs by approximately EUR70-80 million, which could offer upside potential to fiscal year 2025 and 2026 estimates. Nevertheless, due to less robust earnings in recent quarters, including the fourth quarter, the market might discount the positive impact of these self-help actions for the time being.
JPMorgan had previously put Akzo Nobel shares on Positive Catalyst Watch ahead of the earnings release, but the update provided did not meet their more optimistic expectations. As a result, the stock may experience some underperformance today. The firm’s analysis suggests that the lower end of the company’s financial guidance for fiscal year 2025 could be achieved primarily through net cost savings, with the potential for additional upside depending on the extent of volume growth throughout the year. InvestingPro data reveals the stock has shown relatively low price volatility, making it potentially attractive for stability-focused investors seeking companies with consistent financial health scores.
In other recent news, Akzo Nobel NV has been the focus of major investment firms’ positive analysis. Morgan Stanley (NYSE:MS) reaffirmed its Overweight rating on Akzo Nobel, citing possible value creation from the potential sale of the company’s decorative paint business in India. The sale could represent about 5.5-9.2% of Akzo Nobel’s current market capitalization of $9.96 billion, even after considering any earnings lost due to the divestment.
In addition, JPMorgan upgraded Akzo Nobel from Neutral to Overweight, setting a price target of EUR70.00. The firm’s optimism is based on expected annual EBIT growth of 9% in 2025 and 2026, supported by cost savings and improved demand trends. A favorable outlook for raw material prices, particularly oil, is also expected to benefit the company.
Meanwhile, Redburn-Atlantic initiated coverage on Akzo Nobel with a Buy rating and a price target of €80.00. The firm outlined three potential scenarios for the company’s future, including streamlining the supply chain, becoming an acquisition target, or attracting the attention of activist investors. These recent developments suggest a positive outlook for Akzo Nobel from both JPMorgan and Redburn-Atlantic.
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