- Coats Group
- 02 August 2024 15:46:02
Source: Sharecast
Berenberg said Coats’ interim results for the six months to 30 June showed "a highly credible organic growth performance" and noted that a slight upgrade to FY24 guidance, stronger-than-expected margin performance and incrementally more positive commentary about the market recovery saw the shares react strongly on the day after having been range-bound for the past few years.
"At a current valuation of 12.5x FY25 P/E, we still see a lot to like in the shares. We move our price target to 120p (from 100p) as the group enters into what we expect could be the start of a sustained market recovery and upgrade cycle," said Berenberg, which stood by its 'buy' recommendation on the stock.
"We roll our previous valuation methodology of 15x FY1 P/E over from our FY24 forecasts to our FY25 forecasts. Beyond mechanics, we also think it is logical to assign more value to Coats on the back of its H1 results: organic growth has continued to build, with all three divisions in growth in Q2, and this is expected to continue; margins of 18% were provably ahead of management’s FY24 target; and volumes and destocking trends have continued to normalise into what now looks like a sustainable market recovery."
Reporting by Iain Gilbert at Sharecast.com