Bank CEOs meet with Trump to discuss Fannie Mae and Freddie Mac - Bloomberg
On Thursday, UBS began coverage on Nexans (EPA:NEXS) SA (NEX:FP) (OTC: NXPRF), a prominent player in the cable and optical fiber industry, with a positive outlook. Christopher Leonard, an analyst at UBS, issued a Buy rating for the company’s stock along with a price target of €145.00.
Leonard’s assessment suggests that Nexans is poised for significant growth in the coming years, particularly within the high voltage (HV) sector. The analyst forecasts a compound annual growth rate (CAGR) of 25% for Nexans’ EBITDA from 2024 to 2027 in the HV segment. This optimism is based on a combination of factors that Leonard refers to as "mix tailwinds."
The company’s diverse operations, which include medium voltage (MV) and low voltage (LV) categories, are also expected to contribute to its financial success. Leonard predicts that this diversified exposure will lead to improved returns by 2028.
A strategic move anticipated by UBS is the divestment of approximately 24% of Nexans’ expected sales in 2024, which is planned for 2025. Such divestments could elevate the company’s EBITDA margins significantly, from an estimated 11% in 2024 to around 13.5% following the divestments, according to UBS estimates.
In his report, Leonard also touches upon a valuation method known as a reverse Sum of the Parts (SOTP). This analysis, he suggests, indicates that the current market valuation does not account for the value of Nexans’ HV Transmission business. In essence, Leonard implies that the HV segment is undervalued, which presents a potential upside for investors.
The Buy rating by UBS reflects a strong conviction in the growth prospects and strategic initiatives of Nexans. The company’s focus on HV, along with its diversified operations in MV and LV, positions it favorably for future financial performance, as per UBS’s analysis.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.