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Investing.com - JPMorgan has reinstated coverage of Swiss building materials company Holcim Ltd (SIX:HOLN) with an overweight rating and a price target of CHF65.00, implying 20% upside potential.
The investment bank’s decision is based on Holcim’s attractive valuation compared to Swiss peers Geberit (SIX:GEBN) and Sika (SIX:SIKA), with the company trading at a 52% discount on an EV/EBITDA basis while offering more attractive free cash flow and dividend yields.
While Holcim trades at a premium to competitor Heidelberg (ETR:HDDG) Materials (8.5x versus 7.3x), JPMorgan views the valuation as justified due to improving industry fundamentals and a relatively more optimistic outlook for Europe compared to the United States in the short term.
The bank also cited Holcim’s Swiss listing as supporting a premium valuation, along with the company’s year-to-date underperformance versus other European cement stocks.
JPMorgan expressed a positive outlook for European cement stocks in general, naming Heidelberg Materials as its top pick in the sector.
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