Buy Rating for Verallia SAS: Potential Upside Amid BWGI Bid and Margin Recovery Prospects

Verallia SAS (VRLA – Research Report), the Consumer Cyclical sector company, was revisited by a Wall Street analyst yesterday. Analyst Lars Kjellberg from Stifel Nicolaus maintained a Buy rating on the stock and has a €36.65 price target.

Lars Kjellberg has given his Buy rating due to a combination of factors that suggest potential upside for Verallia SAS despite recent challenges. The company’s stock is supported by an impending bid from BWGI at €30 per share, which provides a floor to the stock price and overshadows the weaker-than-expected Q1 results. This bid is anticipated to be filed soon and is not contingent on a high success threshold, which adds a layer of security for investors.
Furthermore, despite the significant margin compression in Q1, Verallia’s revenue was slightly above expectations, and there are signs of volume recovery in key segments like beers and soft drinks. The company has also maintained a strong dividend yield, which is projected to increase in the coming years. While the guidance for 2025 has been lowered, the expectation of a snap recovery in margins and the company’s confidence in generating substantial free cash flow support the Buy rating.

Kjellberg covers the Consumer Cyclical sector, focusing on stocks such as Avery Dennison, International Paper Co, and Graphic Packaging. According to TipRanks, Kjellberg has an average return of 6.9% and a 51.77% success rate on recommended stocks.