- Morgan Advanced Materials
- 23 October 2025 10:48:40
Source: Sharecast
It said the group’s end-markets continue to face significant challenges and dislocations.
"However, with 2026 consensus earnings per share having fallen by circa 45% over the past 18-24 months, high-margin semiconductor customers reporting sequential revenue improvement and potentially returning to year-on-year growth ahead of restocking in 2026, and a strategic update due from new CEO Damien Caby in December 2025, we see catalysts that could underpin improved share price performance, while acknowledging that current weak earnings momentum makes timing the inflection difficult."
The bank noted that Morgan will hold a capital markets event on 4 December, at which Caby will present an updated strategy. It said this was a key near-term catalyst to demonstrate the medium-term potential in the group.
"We expect evolution not revolution, including likely new cost savings and efficiency targets, but with scope to take the group into new adjacencies to capture more value in the supply chain and make better use of the group’s footprint," Berenberg said.
The bank also said the stock’s valuation is inexpensive.
"While not blow-out cheap on free cash flow yield (6.2%) or EV/EBITA (9.2x), the current dividend yield of 5.9% is supportive and we see value here at 10.8x 2026 P/E if the group can provide a credible path to growth recovery and margins in the teens, in keeping with its existing medium-term goals," it said.
Berenberg said consensus estimates are still coming down towards its forecasts following the recent trading update but, with the stock near the lows of its 10-year trading range and scope for some markets to improve in 2026, it sees risk/reward tilted to the upside.