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Investing.com - Morgan Stanley (NYSE:MS) downgraded GEA Group AG (ETR:G1A) (OTC:GEAGY) from Overweight to Equalweight on Wednesday, while raising its price target to EUR62.00 from EUR57.00.
The investment bank cited the company’s improved margin outlook as a key factor in its decision, noting that GEA’s "under-appreciated margin and cash return story" has become "much better understood" by the market following two margin guidance upgrades from management—one on October 14, 2024, and another on July 31, 2025.
Morgan Stanley pointed out that consensus expectations for GEA’s 2028 EBITDA margins have increased by 200 basis points since September 2024, now reaching 17.6%, while absolute 2028 EBITDA forecasts have risen by 16% during the same period.
The downgrade also reflects GEA’s valuation, with Morgan Stanley noting the company "has continued to re-rate, and has now erased most of the valuation discount versus its Mechanicals peers."
With the bank’s updated 2028 EBITDA forecasts "only broadly in line with consensus," Morgan Stanley concluded it is "now the right time to take a more balanced view on the stock, and look at other opportunities in the sector."
In other recent news, BofA Securities downgraded GEA Group AG’s stock rating from Buy to Underperform, adjusting the price target from EUR 60.00 to EUR 52.00. This change reflects concerns about a weaker capital expenditure cycle in the Food & Beverage sector, particularly in the company’s largest markets, the United States and China. Analysts at BofA Securities also pointed out risks to GEA Group’s margin expansion, citing potential impacts from European tariffs and challenges in project execution. Despite a consensus forecast predicting a 50 basis points margin expansion annually from 2025 to 2027, the analysts noted that GEA Group’s shares are currently valued at a ten-year high compared to the sector. These developments are crucial for investors to consider when evaluating GEA Group’s future prospects.
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