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Investing.com -- Goldman Sachs has begun research coverage on Compagnie de Saint-Gobain (EPA:SGOB) shares with a Neutral rating and a 12-month price target of €110, representing an upside of around 12% from current levels.
The bank says the French company is “entering the next chapter,” having completed a six-year turnaround that meaningfully lifted earnings and narrowed its valuation gap to peers.
“With margin repair efforts now largely complete, we see the company entering the next chapter, one in which priorities shift to topline growth,” analysts Ben Rada Martin and Patrick Creuset wrote.
They cited upside potential in structural growth segments such as European residential renovation and Construction Chemicals, alongside positive pricing in the Americas and margin opportunities in both regions.
Goldman sees potential in Saint-Gobain’s ability to “capitalize on an inflecting European residential cycle,” and highlighted cross-selling of its expanded product portfolio as a strategic lever.
The company’s performance in Northern Europe has already begun to improve, and Southern Europe is expected to follow later in the year. Goldman estimates that volume-to-EBIT leverage in upcycles has historically reached around 3x in Southern Europe.
However, the recent share price rally, up 47% since January 2024 versus a 1% decline for peers, suggests much of the upside is already reflected.
“We sit +2-3% ahead of Visible Alpha Consensus Data FY25-27 EPS but believe shares largely price in the upside risk,” the analysts said, explaining their Neutral stance on the stock.
The bank’s valuation is based on a 14x forward price-to-earnings (P/E), a slight discount to the 15x peer average but a premium to the company’s 20-year average of 12x.
To justify a re-rating, Goldman analysts said they would need “stronger-than-expected Europe resi cycle” or clear signs that Saint-Gobain can deliver higher structural growth beyond cyclical improvements.