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On Wednesday, Berenberg adjusted its price target for Deme Group NV (DEME:BB) to €180.00 from the previous €185.00, while reaffirming its Buy rating on the stock. The adjustment follows Deme Group's first-half 2024 financial results, released on August 29, which surpassed both Berenberg's and the consensus estimates. Additionally, management raised the full-year forecast.
Despite the positive results and outlook, Deme Group's stock experienced a roughly 7% drop since the announcement. Berenberg attributes this decline to the company's new medium-term guidance, which suggests revenue will remain broadly stable in the upcoming years.
The firm recognizes that the prospect of no top-line growth could be seen as a disappointment, yet it emphasizes that the situation stems from stronger-than-expected progress in 2024.
The firm remains optimistic about Deme Group's future earnings growth, citing increased profitability and a growing contribution from joint ventures and associates.
Berenberg notes that the combination of revised estimates and the stock's lower price point makes Deme Group's shares an attractive proposition. The stock is currently valued at 13 times the projected 2025 earnings per share and offers an 8% free cash flow yield for the same year.
In conclusion, despite the slight reduction in the price target, Berenberg maintains a positive outlook on Deme Group NV, based on the company's financial performance and potential for earnings growth. The firm's stance reflects its confidence in the stock's value and future prospects.
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