On Tuesday, Nexans SA (NEX:FP) (OTC: NXPRF) received an updated price target from Jefferies, a prominent financial services company. The price target for the cable manufacturer was raised to €132.00 from €125.00, while the firm maintained its Buy rating on the stock. The revision reflects a positive outlook for the company's first-half results, driven by several factors including continued positive demand in Distribution, pricing and margin resilience in Usages, and steady progress in the Generators & Transformers (G&T) segment.
The analyst from Jefferies indicated that the recent closing of Nexans' acquisition of LTC is a contributing factor to the upgraded forecasts. This strategic move is expected to enhance Nexans' operational capabilities and market position. Additionally, the company's EuroAsia Interconnector project, which aims to connect the electricity grids of Asia and Europe, is moving forward, although it still requires a final investment decision (FID) during the summer to mitigate risks associated with the firm's 2025 projections.
The financial firm has increased its estimates for Nexans by a high single-digit percentage and has reiterated its sum-of-the-parts (SOTP) valuation approach, leading to the new price target of €132. The SOTP method involves valuing each part of the business separately to arrive at an overall company valuation.
Jefferies' positive stance on Nexans is based on expectations that the company will experience a catalyst in the form of favorable half-year results. Key to this outlook is the company's ability to navigate the current market environment effectively, leveraging positive demand trends, and executing its strategic initiatives such as the LTC acquisition and the EuroAsia project.
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