David Farrell, an analyst from Jefferies, maintained the Buy rating on Coats Group plc. The associated price target remains the same with p130.00.
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David Farrell has given his Buy rating due to a combination of factors that highlight Coats Group plc’s strategic and financial positioning. The company’s recent acquisition of OrthoLite for $770 million is a significant move into the premium insole market, which is expected to enhance its Footwear Component business. This acquisition positions Coats as a “super Tier 2” supplier, capturing a leading market share of 36%.
Financially, the acquisition is attractive with a 10x EV/EBITDA multiple, which is favorable compared to previous acquisitions in 2022. OrthoLite’s strong EBITDA margins of 28% further enhance the financial appeal, promising a margin accretive deal by FY28. Additionally, the cost synergies projected at $20 million are conservative yet promising, potentially leading to earnings per share accretion by FY26. These strategic and financial aspects underpin Farrell’s confidence in the company’s growth prospects, justifying the Buy rating.
Farrell covers the Industrials sector, focusing on stocks such as Chemring, Volution, and Hill & Smith Holdings. According to TipRanks, Farrell has an average return of 10.5% and a 63.89% success rate on recommended stocks.
In another report released on July 4, RBC Capital also maintained a Buy rating on the stock with a p110.00 price target.