Kingspan Group PLC (KSP: ID) experienced a revision in its stock outlook by a Jefferies analyst, resulting in a lowered price target. The new price target is set at EUR80.20, a decrease from the previous EUR82.10, while the firm's rating remains at Hold.
The adjustment comes after Kingspan reported first-half 2024 results that did not meet expectations, with profits falling short by approximately 5% and the full-year 2024 profit forecast being about 3% below the consensus.
Kingspan's performance in the first half of the year was described as lackluster, with several factors contributing to the tempered outlook. Despite signs of improving volume trends as suggested by recent order intakes, the company faces challenges.
Pricing continues to be deflationary, and profitability in the Insulation division, one of Kingspan's highest-margin sectors, is currently subdued. Additionally, the pace of mergers and acquisitions may decelerate as the company takes time to integrate recent transactions.
The analyst's commentary highlighted these concerns, noting that investors might not feel compelled to purchase shares at this time.
This caution is further supported by Kingspan's valuation, which stands at 13.5 times its estimated 2025 enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA).
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