On Tuesday, Morgan Stanley maintained an Overweight rating on shares of Prysmian SpA (PRY:IM) (OTC: PRYMY) and increased its price target to €69.00 from the previous €57.00. The firm's assessment is based on Prysmian's trading at a 11.9x 2025 estimated EV/EBIT, which represents a 6% discount compared to its Electrical peers. Historically, the company has averaged a 15% discount.
The outlook for Prysmian's organic growth has been significantly revised, with expectations for the company to achieve approximately 6% average organic growth from 2025 to 2028. This projection places Prysmian towards the higher end of the Electricals sector's growth range. Such a growth rate is a notable increase from Prysmian's pre-COVID 10-year average growth of 1%.
Prysmian's forward-looking financial metrics also appear favorable, with a forecasted free cash flow (FCF) yield of 4.8% in 2025, which is anticipated to increase to 5.9% by 2026. Morgan Stanley suggests that Prysmian's valuation, as reflected in its FCF metrics, does not appear overstretched even after the stock's strong performance.
The firm's analysis indicates confidence in Prysmian's growth trajectory and financial health. Prysmian's stock valuation currently reflects both its growth prospects and its position relative to industry peers.
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