Analyst Andrew Douglas from Jefferies maintained a Buy rating on Severfield and keeping the price target at p41.00.
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Andrew Douglas has given his Buy rating due to a combination of factors, primarily focusing on Severfield’s strategic positioning and potential for long-term growth. Despite recent trading challenges and the desire for reduced debt levels, Douglas sees significant recovery potential in Severfield’s medium to long-term outlook, particularly through its joint venture in India.
Moreover, the recent announcement of the Option Agreement with JSW Steel Limited adds a layer of financial flexibility, valuing Severfield’s joint venture stake at approximately £40 million. This valuation is not currently reflected in the share price, suggesting an undervaluation that could lead to shareholder value creation. The strategic importance of the JSSL joint venture and the potential to capitalize on this agreement further support the Buy rating.