On Monday, Jefferies, a global investment banking firm, adjusted its price target for Assa Abloy (OTC:ASAZY) shares listed on the Stockholm Stock Exchange (ASSAB:SS) and over-the-counter (OTC: ASAZY). The new target is set at SEK 292.00, increased from the previous SEK 275.00, while the firm retains a Hold rating on the stock.
The change in price target reflects Jefferies' forecast of a 0.6% organic revenue growth for Assa Abloy. The firm's analysis includes an anticipated 50 basis points impact on the company's Home Improvement Products (HHI) segment due to working-day effects. Jefferies has a more optimistic view of the Global Technologies division's revenues, predicting a smaller quarter-over-quarter headwind from backlog conversion.
Jefferies estimates an adjusted EBIT (earnings before interest and taxes) for Assa Abloy at SEK 6.2 billion, which would represent a margin of 16.0%. This estimate positions Jefferies below the consensus margin estimates for the Global Technologies sector. However, it surpasses expectations for the Entrance Systems and Americas divisions.
The firm noted Assa Abloy's positive stance on the potential recovery of the U.S. residential market. Additionally, Jefferies anticipates that Assa Abloy may adopt a more constructive outlook on the Nordic region's market conditions. These factors contribute to the rationale behind the revised price target, signaling a cautiously optimistic perspective on the company's financial performance.
In other recent news, Citi has adjusted its stance on Assa Abloy shares. The firm increased the price target from SEK265 to SEK275 while maintaining a Sell rating. Citi highlighted the strong performance of Assa Abloy's Entrance Systems division in Q1 2024, but expressed caution due to no significant shift in the company's outlook on its residential segment. The firm also adjusted its earnings per share (EPS) forecast for Assa Abloy, estimating a 5% to 6% increase.
Citi's analysis suggests that the optimism for the U.S. residential market may be high, considering the persistent high-interest rate environment. The firm also anticipates potential risks of a slowdown in the non-residential market due to weak Architectural Billings Index (ABI) trends. Despite these concerns, favorable foreign exchange rates have contributed to the decision to raise the price target.
These are recent developments, highlighting the ongoing analysis and adjustments made by Citi in its outlook for Assa Abloy. The firm continues to maintain a cautious perspective on the market outlook for the company.
InvestingPro Insights
As Assa Abloy (OTC: ASAZY) continues to navigate its position in the market, real-time data from InvestingPro shows a company with stability and growth potential. With a market capitalization of $32.3 billion and a trailing twelve-month revenue growth of 13.38%, Assa Abloy demonstrates a robust financial stature. The company's P/E ratio stands at 23.61, which might seem elevated, but two analysts have recently revised their earnings upwards for the upcoming period, reflecting a positive outlook on the company's profitability.
InvestingPro Tips highlight Assa Abloy's consistent performance, including a track record of raising its dividend for 14 consecutive years and maintaining dividend payments for 29 years. This consistency is a testament to the company's financial health and commitment to shareholder returns. Moreover, Assa Abloy operates with a moderate level of debt and is anticipated by analysts to remain profitable this year, which could be a reassuring sign for investors considering the company's stock.
Assa Abloy's stock generally trades with low price volatility, indicating a stable investment for those looking to avoid significant market swings. For more in-depth analysis and additional InvestingPro Tips, potential investors can explore the company's profile on https://www.investing.com/pro/ASAZY. There are 6 more tips available that could provide further insights into Assa Abloy's performance and outlook. To gain access to these valuable insights, readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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