In a report released today, Tobias Woerner from Stifel Nicolaus maintained a Buy rating on Buzzi SpA (0NVQ – Research Report), with a price target of €50.00.
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Tobias Woerner has given his Buy rating due to a combination of factors surrounding Buzzi SpA’s strategic acquisition in the UAE. The company has taken a significant stake in the Gulf Cement Company, which is seen as an opportunistic move to enter a new market with potential for future growth. Despite the challenging market conditions in the UAE, characterized by over-capacity and sub-optimal margins, the acquisition provides Buzzi with a large, low-cost asset that could yield operational benefits in the medium to long term.
Moreover, the deal is considered counter-cyclical and aligns with Buzzi’s strategy of acquiring undervalued assets, similar to their previous ventures. The valuation of the acquisition is notably low compared to other markets, suggesting a favorable risk-reward ratio. While the deal is currently earnings dilutive, the low cash cost per ton indicates potential for significant upside. Woerner believes that Buzzi’s operational expertise could improve margins and capitalize on this strategic entry into the Gulf region.