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On Tuesday, Morgan Stanley (NYSE:MS) analysts upgraded Rockwool shares from an Equalweight to an Overweight status, while also raising the price target to DKK300.00 from the previous DKK259.00. The upgrade reflects a positive outlook on the company’s prospects despite a challenging market environment.
Analysts at Morgan Stanley highlighted that historical trends indicate high-single-digit percentage declines in volume during recessions. However, they note that given the current subdued state of the construction market and an improved industry structure, they forecast a fiscal year 2025 volume and pricing change of negative 4% and positive 1%, respectively.
The analysts pointed out that Rockwool’s valuation multiple has decreased compared to its peers, which they believe is not fully recognized by the market. Additionally, they mentioned that potential benefits from declining energy costs, which could serve as a tailwind for the company, have been overlooked.
Morgan Stanley’s move to upgrade Rockwoil’s stock rating to Overweight is based on these factors, suggesting a belief in the company’s resilience and potential for growth. The raised price target to DKK300.00 reflects the analysts’ increased confidence in Rockwool’s ability to navigate through economic downturns and emerge stronger.
The statement from Morgan Stanley concludes with an emphasis on the undervalued aspects of Rockwool’s stock, particularly in relation to its industry peers and the energy cost advantages that are currently not fully appreciated by the market. This perspective has led to the decision to recommend a more bullish stance on the company’s shares.
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