Befesa S.A. (BFSA – Research Report), the Industrials sector company, was revisited by a Wall Street analyst yesterday. Analyst Adahna Ekoku from Morgan Stanley upgraded the rating on the stock to a Buy and gave it a €32.00 price target.
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Adahna Ekoku has given his Buy rating due to a combination of factors that highlight Befesa S.A.’s promising financial outlook and strategic positioning. The company’s recent strong performance and effective execution have bolstered confidence in its ability to enhance earnings, particularly with favorable zinc hedging strategies that provide visibility into 2025-26 earnings. This has led to positive earnings revisions and limited risks of downgrades, positioning Befesa ahead of consensus expectations.
Moreover, Befesa’s financial discipline, marked by a capex ceiling and robust cash generation, is expected to facilitate significant deleveraging, addressing a major investor concern. The company’s exposure to structural growth drivers, such as EAF steelmaking and secondary aluminum production, along with its defensive positioning against market volatility, makes it an attractive investment. Additionally, Befesa’s valuation remains appealing, trading at a discount compared to peers, with potential for re-rating as execution risks diminish. These factors collectively underpin the Buy rating, despite the need for continued execution to sustain performance and manage capital allocation effectively.
According to TipRanks, Ekoku is a 2-star analyst with an average return of -1.5% and a 0.00% success rate.