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On Wednesday, Kepler Cheuvreux analyst Martin Flueckiger upgraded Zehnder Group AG (ZEHN:SW) stock from Hold to Buy, raising the price target from CHF56.00 to CHF67.00. The revision comes as Flueckiger anticipates a recovery in the construction markets that are crucial to Zehnder’s business, starting in the second half of the year.
Flueckiger’s optimism is based on an analysis of leading indicators for the company’s main construction markets. The analysis indicates that these markets may have bottomed out and could be on the cusp of a rebound. This potential upturn is expected to begin in the latter half of 2025.
The upgrade also follows Zehnder’s announcement of better-than-expected sales for the second half of 2024, which were reported in January. This positive sales performance has led to an increase in the firm’s earnings per share (EPS) estimates for Zehnder by an average of 5.7% for the years 2024-26E.
Flueckiger’s statement provided further insight into the rationale behind the upgrade: "Ahead of Zehnder’s full-year 2024 results, due to be reported on February 26, we have taken a closer look at various leading indicators for the company’s main construction markets. Our analysis suggests that markets have reached the bottom and are set for a recovery as of H2 this year."
Investors and market watchers are now looking forward to Zehnder’s full-year 2024 results, which will be disclosed on February 26, to see if they align with Kepler Cheuvreux’s positive outlook and justify the revised price target and stock rating upgrade.
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