Morgan Stanley analyst Max Yates maintained a Hold rating on Metso Outotec today and set a price target of €10.80.
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Max Yates has given his Hold rating due to a combination of factors reflecting both positive performance and cautious valuation considerations. Metso Outotec reported strong third-quarter results, with a notable 15% growth in the Minerals aftermarket segment and an 11% beat on adjusted EBITA compared to consensus. This performance was driven by robust revenue recognition in Minerals Equipment and a recovery in EBITA margins to a normalized level of 18%. Additionally, the company demonstrated improved free cash flow, which marks a positive shift from previous years.
Despite these encouraging results, Yates maintains a Hold rating, primarily due to valuation concerns. While Metso’s valuation at 12 times the estimated 2026 EV/EBITA appears relatively undemanding, Yates prefers Sandvik due to its reasonable valuation and favorable exposure to upstream mining. The outlook for stable demand in mining and aggregates equipment is positive, but Yates suggests that the current valuation does not offer sufficient upside potential to warrant a more bullish stance.
In another report released today, Jefferies also maintained a Hold rating on the stock with a €12.60 price target.