On Friday, Deutsche Bank expressed a positive outlook on Evonik Industries AG (EVK:GR) (OTC: EVKIF) shares, raising its price target to €26 from €25 while reiterating a Buy rating.
The firm anticipates a significant increase in the company's second-quarter earnings before interest, taxes, depreciation, and amortization (EBITDA), projecting a 24% year-over-year rise to €558 million. This figure surpasses the management's guidance, which estimated the EBITDA to be around the first quarter's level.
The analyst from Deutsche Bank predicts robust performance across most of Evonik's divisions, with the Nutrition & Care segment expected to see its EBITDA more than double.
Volume growth is forecasted at 4.6% year-over-year, a slight improvement from the 4% growth observed in the first quarter. Despite a 1% year-over-year decline in pricing, which is an improvement from the 5% drop seen in the previous quarter, the overall growth is expected to remain strong.
The anticipated improvement in EBITDA is also expected to contribute to a better EBITDA margin, which is forecasted to increase by 250 basis points to 14.0%. This enhancement in profitability is attributed to the strong growth across the company's divisions.
Evonik's second-quarter financial performance is also expected to see a notable improvement in free cash flow (FCF). Deutsche Bank forecasts at least a €200 million year-over-year increase in FCF, bolstered by the rising EBITDA and reduced bonus payments.
The revised price target and sustained Buy rating reflect the analyst's confidence in Evonik's upcoming financial results and the company's ability to continue its growth trajectory in the second quarter of 2024.
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