UniCredit Bank Maintains its BUY Rating on Safilo, Target Price Reduced

October 07 00:00 2011

LONDON, October 7 (RainbowNewsLine.com): Analysts at UniCredit Equity Research have reiterated their BUY rating on Safilo (BIT: SFL). The spot price as on October 6 was €6.02, and the target price has been reduced from €11.20 to €9.60.

The major factors supporting the analyst decision is that a stronger platform is been created due to capital restructuring and organizational changes which would benefit to leverage market recovery and to reach out to their old profitability levels. The analyst have highlighted some other factors like

  • The business model presented by the management is lifeless with sensible but unexciting and unambitious views.
  • The management also confirmed that the renewal of Armani license is not confirmed yet.
  • The analyst has cut down their expected EPS of Safilo by 4-5% following the release of business model and slower growth patterns.

The analyst confirms the BUY rating after considering the loss of Armani contract and sets his new target price at €9.60. Based on realistic earnings scenario and assuming the renewal of Armani contract the new target price is expected to move at €12.8. However stock will trigger only when the licenses are renewed for contracts and the company is able to deliver profitability improvements, the analysts add.