On Wednesday, Deutsche Bank updated its financial outlook for Fuchs Petrolub SE (FPE3:GR) (OTC: FUPBY), raising the price target to EUR55.00 from the previous EUR54.00, while reaffirming a Buy rating on the stock. The adjustment comes ahead of the company's third-quarter earnings report, which is scheduled for release on October 30, 2024.
The bank's analyst anticipates that Fuchs Petrolub will show a year-over-year increase of 4% in sales and a 3% rise in EBIT (earnings before interest and taxes) for the third quarter, with an EBIT margin of 12.8%. This represents a slight decrease of 30 basis points year-over-year but an improvement of 30 basis points quarter-over-quarter. The forecast suggests that volume recovery and the sale of higher-margin specialty products, along with an increase in aftermarket sales, are expected to drive the growth.
Fuchs Petrolub's CEO has expressed a positive outlook for the second half of the year, leading the company to project revenues of approximately EUR3.6 billion for the full year 2024. This figure is slightly higher than Deutsche Bank's estimate of EUR3.57 billion, indicating a 1% year-over-year increase. The company also expects to achieve an EBIT of EUR430 million, which is marginally lower than Deutsche Bank's projection of EUR441 million, signifying a 7% year-over-year growth. Furthermore, the company forecasts free cash flow to be around EUR250 million, compared to Deutsche Bank's expectation of EUR240 million.
Deutsche Bank regards the company's full-year guidance as conservative, noting that it suggests modest revenue and EBIT growth of 1% and 4% year-over-year, respectively. Additionally, the guidance implies an EBIT margin improvement of only 20 basis points year-over-year. The forthcoming quarterly results will provide further insights into the company's financial trajectory and the accuracy of these projections.
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