Morgan Advanced Materials (MGAM – Research Report), the Industrials sector company, was revisited by a Wall Street analyst today. Analyst David Farrell from Jefferies maintained a Hold rating on the stock and has a p280.00 price target.
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David Farrell has given his Hold rating due to a combination of factors influencing Morgan Advanced Materials’ financial outlook. Although the company’s FY24 EBITA exceeded expectations by 3%, the future guidance suggests a decline in consensus EBITA for FY25. This is primarily due to anticipated mid-single-digit organic revenue declines and no expected recovery in the second half of the year. The company’s margins are projected to recover only to the lower end of the target range, which contributes to the cautious outlook.
Furthermore, Morgan Advanced Materials has reduced its semiconductor capital expenditure plans, scaling back investment from £100 million to £60 million. This reduction is expected to halve the anticipated revenue and EBITA uplift, reflecting slower growth in the battery electric vehicle market and high customer inventory levels. Despite these challenges, the company remains optimistic about achieving its medium-term financial goals, which will be a focal point in upcoming discussions. These factors collectively justify the Hold rating, as they indicate a balanced risk-reward scenario for investors.
According to TipRanks, Farrell is a 4-star analyst with an average return of 6.7% and a 57.02% success rate.