Vesuvius PLC on the right track, but it’s not there yet
The price target rises to 550p from 450p but Deutsche Bank sticks with its ‘hold’ rating
has raised its target price for (), the engineered ceramics firm spun, after results last week.
The price target rises to 550p from 450p but with Vesuvius trading at around 533p, the bank sticks with its ‘hold’ rating, preferring Bodycote in the sector.
Like its sector peers, the company is operationally geared, so should there be a recovery that boosts the top line, much of the increased revenue will drop through to the bottom line.
Deutsche Bank commended the management of Vesuvius for efficiently taking costs out of the business and thinks there is further to go on this front.
“This includes further production footprint rationalization, but also we are of the view that over the next three years Vesuvius could exit the lower and more commoditized regions of Advanced Refractories, namely the US and Europe,” the Deutsche Bank (DB) team said.
“We view this as a higher profile and a more structural restructuring of the division and increasing focus on Flow Control within Steel. It will also be beneficial to divisional margin through improving mix and providing further support to the margin expansion story,” DB added.
Read More: Vesuvius PLC on the right track, but it’s not there yet