Cautious Hold Rating for Morgan Advanced Materials Amid Moderate Revenue Decline and Cost-Saving Progress

Jefferies analyst David Farrell has maintained their neutral stance on MGAM stock, giving a Hold rating on April 25.

David Farrell’s rating is based on a combination of factors that suggest a cautious outlook for Morgan Advanced Materials. The company’s recent AGM update indicated a 3.5% decline in organic revenue, which, while not as severe as anticipated, aligns with the group’s guidance for a mid-single-digit decline for the fiscal year. This decline is relatively moderate compared to peers like SGL Carbon, which reported a more significant drop in revenue.
Additionally, Morgan Advanced Materials is making progress with its cost-saving measures, which are expected to help recover margins to a target level of 12.5% during the year. However, there is no new information regarding the company’s share buyback or balance sheet, leading to the assumption that the group remains on track with its plans. This cautious approach, coupled with the expectation that the share buyback might be paused due to net debt concerns, supports the Hold rating as the company navigates these challenges.

In another report released on April 25, Barclays also downgraded the stock to a Hold with a £2.20 price target.