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On Tuesday, UBS analyst Christopher Leonard upgraded Prysmian SpA (BIT:PRY:IM) (OTC: PRYMY) stock rating from Neutral to Buy, setting a price target of EUR70.00. Leonard highlighted that Prysmian shares have fallen approximately 17% since the company reported fourth-quarter 2024 results and provided conservative guidance for 2025 in its Grid (MV) and Electrification (LV) segments. According to InvestingPro data, the stock has declined 15.3% over the past six months, with its RSI indicating oversold territory. This reevaluation of expectations through to 2028 has paved the way for the upcoming Capital Markets Day on 26 March to potentially serve as a positive catalyst for the stock, along with the consideration of a dual listing in the United States.
Prysmian is currently trading at around a 30% discount compared to its peers in the Electrification sector, which is more than the long-term average discount of 10%. The company is recognized for its leading 13% compound annual growth rate (CAGR) in earnings before interest and taxes (EBIT) projected through 2027. InvestingPro analysis shows the stock trading at a PEG ratio of 0.55 and maintaining strong financial health with a "GOOD" overall score. The company has demonstrated solid performance with 11.3% revenue growth in the last twelve months.
Management at Prysmian acknowledged during the fourth-quarter 2024 earnings call that the company had overcompensated for the cancellation of a US facility by expanding more in Europe. These European expansions are expected to be operational before 2027, which is ahead of the original 2027-2028 timeline set for the US site. This development could potentially allow Prysmian to announce additional capacity expansions before 2028 at the March Capital Markets Day.
UBS anticipates a target for Prysmian’s earnings before interest, taxes, depreciation, and amortization (EBITDA) to reach between EUR2.8 billion and EUR2.9 billion by 2028. However, contributions from high voltage (HV) operations could push this figure to around EUR3 billion. The transmission segment is seen as the primary driver for EBITDA growth leading up to 2028. Current EBITDA stands at $1.73 billion, with InvestingPro subscribers having access to over 10 additional financial health indicators and growth metrics that could help evaluate this forecast’s achievability. Furthermore, the expansion of brownfield sites in Europe is expected to yield higher profit margins compared to those in the United States. UBS’s EBITDA forecast for 2028 is 10% higher than the Visible Alpha consensus (VA cons) estimate.
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