Street Calls of the Week
Investing.com - UBS initiated coverage on Befesa SA (ETR:BFSA) with a Buy rating and a price target of EUR44.00 on Friday.
The global investment bank identified Befesa as the worldwide leader in steel dust recycling, describing it as a business with both a "solid moat" and "strong growth opportunities" despite recent challenges.
UBS noted that Befesa shares have lost approximately half their value from 2021-2022 peak levels, primarily because the company’s expansion plans in China have not materialized as expected, with only two kilns currently in operation and further expansion halted.
The bank attributed these Chinese market difficulties to "continued weakness of Chinese EAF steelmakers" - Befesa’s potential clients in the region - and related construction market struggles.
Befesa’s near-term growth prospects now center on increasing Electric Arc Furnace capacity in the United States and Europe, which UBS views as "lower risk regions" that could help the company achieve its 2029 EBITDA target of approximately €300 million, with additional growth potentially coming from "opportunistic M&A in other developed geographies" and organic expansion in developing markets.
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