UBS downgrades Buzzi Unicem stock rating to Neutral on limited upside

Investing.com - UBS downgraded Buzzi Unicem SpA (BIT:BZU) (OTC:BZZUY), the $10.4 billion market cap cement producer, from Buy to Neutral with a price target of EUR52.00 on Tuesday. The stock has delivered an impressive 60% return year-to-date.

The Swiss investment bank cited limited upside potential following a significant re-rating of the cement producer’s shares, which moved from 3.6x consensus EV/EBITDA at Q4 2023 to 6.6x currently.

UBS noted that while Buzzi Unicem maintains positive attributes, including a strong net cash balance sheet of approximately EUR1.1 billion expected by 2025 and exposure to Germany representing over 10% of EBITDA, these factors are now largely reflected in the share price.

The downgrade also highlighted that Buzzi Unicem is lagging European listed peers in terms of decarbonization investments, an area UBS believes offers attractive incremental returns potential.

UBS acknowledged that Buzzi has historically traded at a material discount to peers but sees limited potential for this valuation gap to narrow in the short term.

In other recent news, Buzzi Unicem has been the focus of attention from several major financial analysts. Morgan Stanley upgraded Buzzi Unicem’s stock rating from Equalweight to Overweight, raising its price target to EUR53.00 from EUR44.00. This upgrade is attributed to the company’s strong market presence in regions like the United States and Germany, which account for significant portions of its EBITDA. Meanwhile, Goldman Sachs initiated coverage on Buzzi Unicem with a Neutral rating, setting a price target of EUR47.00. Goldman Sachs highlighted the company’s attractive valuation compared to its peers, noting its 9x forward P/E ratio. These developments reflect the varied perspectives of financial analysts on Buzzi Unicem’s market potential and valuation.

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