On Monday, Deutsche Bank increased its price target on GEA Group AG (G1A:GR) (OTC: GEAGY) shares to €51.00, up from €50.00, while reiterating a Buy rating on the stock. The adjustment follows the anticipation of the company's new long-term strategy announcement, expected to be detailed in its upcoming Corporate Management Development (CMD) invitation.
The firm notes that GEA Group has already achieved some of its MISSION 26 objectives, with room for further progress. Analysts at Deutsche Bank are looking forward to the potential introduction of a higher organic revenue growth target in the new strategy. The expectation is for the company to aim for a 5-7% year-over-year growth, an uptick from the previously set 4-6% target under MISSION 26.
Additionally, the bank anticipates that GEA Group will set a new EBITDA margin target before restructuring expenses of over 17%. This would represent a significant improvement of approximately 200 basis points compared to the MISSION 26 goals. GEA Group's CEO, Stefan Klebert, has expressed a cautious optimism for the second half of 2024.
For the fiscal year 2024, GEA Group has guided organic revenue growth in the range of 2-4% year-over-year, with Deutsche Bank's own estimate slightly higher at 3%. The expected EBITDA margin before restructuring costs is projected to be between 14.9% and 15.2%, with a midpoint indicating a 65 basis point year-over-year improvement.
Despite these positive projections, Deutsche Bank has expressed concern over the impact of foreign exchange headwinds that persisted during the third quarter of 2024. As a result, the bank has reduced its forecasts for GEA Group's reported sales and EBITDA for fiscal years 2024 to 2026 by 3% each, reflecting the potential drag from currency fluctuations.
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