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On Friday, UBS analyst Alex Manoonpol upgraded Osotspa (OSP:TB) (OTC:OSOPF) stock from Neutral to Buy, setting a higher price target of THB19.00, up from the previous THB16.00. The upgrade followed an analyst briefing which led to a more optimistic outlook on the company’s profit margins, despite a projection for lower revenue.
Manoonpol’s assessment was influenced by two main factors. Firstly, there is an expectation for Osotspa’s gross margin to exceed last year’s 37.3%, as the company has secured its key raw materials until the end of the year, with further efficiency gains possible. Secondly, the downside risk for revenue is deemed limited since the domestic energy drink market share has stabilized, and most of the inventory reduction was completed in the first quarter.
The UBS analyst revised the earnings per share (EPS) estimates for fiscal years 2025-2027 upwards by 5-20%, primarily due to the anticipated improvement in gross margins. These revisions underpin the increase in the discounted cash flow (DCF)-based price target to THB19.00.
The briefing provided insights that suggest Osotspa is in a strong position to manage its costs and maintain its market share in the competitive energy drink sector. With the majority of the destocking process reportedly concluded in the first quarter, the company appears to be on a stable footing for the upcoming financial periods.
Investors and market watchers will likely monitor Osotspa’s performance closely, as the company strives to meet these improved financial projections and capitalize on the efficiency gains and market stability outlined by UBS in their upgraded assessment.
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