UniCredit Bank Reiterates its BUY Rating on Andritz

October 10 00:00 2011

LONDON, October 10 (RainbowNewsLine.com) – Analyst Thomas Neuhold of UniCredit Equity Research maintains his BUY Rating on the shares of Andritz (ANDR.VI). The target price is set to €80.00.

In a research note published on 7th October, the analyst mentions that the company in a recent CMD updated about the current market situation and outlook of its various business segments with a significant focus on its hydro business. The long-term prospects remain bright owed to strong underlying structural trends, the analyst says. Andritz has not experienced any noteworthy change in order momentum in the recent months. The analyst has reiterated his BUY rating mainly due to its strong underlying and playing on green power, maintaining strong order momentum and strong financial statements. Yet there are more to support the analyst’s conviction.

  • The company is open to further investments but they will maintain their current focus on integration of their recent acquisitions.
  • The company plans to continue its share buyback program if price to come down lower, but have no short-term plans to use the cash surplus now.
  • Andritz expects high performance in coming years, they projects sales of €4 billion in 2011 and €4.5 billion in 2012. Moreover, they predict a 7% EBITDA over the cycle along with a tax rate of around 30%.
  • The company targets 10% sales growth but in analyst view the sales guidance for 2011 and ’12 is very conservative due to high order backlog of EUR 7.2 billion as of 1H’11.

The analyst has maintained his BUY rating on Andritz, mainly due to its strong order backlogs that would drive the earnings, good position in the market and its overall confident approach towards growth. According to the analysts, the factors that can trigger the stock in future are new order flows, more acquisitions or corporate actions and sales in cyclical areas. The stock is currently trading at 5.9x expected EV/EBIT for 2012 and the analyst believes it to be a great value stock.