Outokumpu: Deutsche Bank upgrades to buy.
(CercleFinance.com) - Deutsche Bank is more optimistic about the outlook for Finnish steel maker Outokumpu, which is specialised stainless steel.
Analysts have upgraded their former hold rating on the stock to buy, with a target price of 11 euros, against 7.5 euros previously.
"We have always appreciated the turnaround of Outokumpu's accounts," says a research note, "but we believe that the market has underestimated the combined impact of savings and leverage resulting from rising ferrochrome prices,” the research paper adds.
This should induce a sharp increase in cash generation: "Outokumpu should continue the accelerated deleveraging it has undertaken, reducing its interest burden accordingly," experts argue. This opens up prospects for returning cash to shareholders and justifies the rating upgrade.
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