Source: Sharecast
Berenberg said Senior's recent announcement that it has agreed to sell its aerostructures business was "a pivotal moment" for the company, in its view.
The German bank said the sale of the aerostructures business will give Senior the opportunity to structurally increase its group operating margins, focus on higher growth and more value-added products and provide more capital allocation options.
Following the completion of the sale, Berenberg reckons group revenues should "move closer to a more balanced revenue base" between industrial and aerospace end-market exposure.
"We therefore broaden the traditional aerospace and defence peer group to include more industrial fluid control peers. We expect re-rating potential ahead as revenue growth, margins and cash generation increase," said Berenberg.
"We apply a 25% discount to our EV/EBITDA-based price target to reflect the lower relative margin profile at Senior. Senior currently trades on CY26E EV/EBITDA of 8.4x, half the level of its higher margin and lower than its financially leveraged peers."
Reporting by Iain Gilbert at Sharecast.com