Ontex: 'a very attractive entry point' (Credit Suisse)
(CercleFinance.com) - This morning Credit Suisse confirms its buy rating ("outperformance") on the share of the Belgian specialist of personal hygiene solutions for babies, women and adults, Ontex.
Despite trimming its target price for the share from 30 euros to 28 euros, this still suggests upside potential of around 25%.
Since the beginning of the year, the Ontex share has lost 19% of its value on the Brussels Stock Exchange. In the wake of the group's annual accounts, which were published on 6 March, Credit Suisse reduced its EBITDA margin forecast for 2018 from 11.3% to 11.1%. Admittedly, "We believe the market is right to question the value destruction caused by the acquisition in Brazil," which now represents 10% of Ontex's revenues. Indeed, management's credibility has been momentarily curtailed.
Although, with a 2019 P/E of just 11.5x, Ontex's valuation is considered "abnormal". This is particularly so, as the group's strong positions in Western Europe are doing well, and that its Mexican acquisition is generating strong growth (+12% in 2017), which is set to last. In short, Credit Suisse believes that the current price of the Ontex share represents "a very attractive entry point."
Copyright (c) 2018 CercleFinance.com. All rights reserved.
The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.
Despite trimming its target price for the share from 30 euros to 28 euros, this still suggests upside potential of around 25%.
Since the beginning of the year, the Ontex share has lost 19% of its value on the Brussels Stock Exchange. In the wake of the group's annual accounts, which were published on 6 March, Credit Suisse reduced its EBITDA margin forecast for 2018 from 11.3% to 11.1%. Admittedly, "We believe the market is right to question the value destruction caused by the acquisition in Brazil," which now represents 10% of Ontex's revenues. Indeed, management's credibility has been momentarily curtailed.
Although, with a 2019 P/E of just 11.5x, Ontex's valuation is considered "abnormal". This is particularly so, as the group's strong positions in Western Europe are doing well, and that its Mexican acquisition is generating strong growth (+12% in 2017), which is set to last. In short, Credit Suisse believes that the current price of the Ontex share represents "a very attractive entry point."
Copyright (c) 2018 CercleFinance.com. All rights reserved.
The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.