In a new report of hers on Metlen, BofA maintains a “Buy” recommendation, with a target price of €63.
The main reason for the significant upside potential is that, at present, Metlen is trading with an EV/EBITDA ratio of about 6x, while the analyst, taking into account the company’s ability to create value, looks for an EV/EBITDA of around 9x.
BofA confirms the company’s guidance while at the same time it forecasts annual EBITDA of €1.036 billion.
The analyst reaffirms the synergies between the Energy and Metals sectors, which he characterizes as particularly attractive, while he estimates an upward path for aluminum in the coming period.
The “path” for EBITDA 2 billion euros in a mid-term horizon
Metlen presented in April, at Capital Markets Day, the road map for achieving a mid-term target for EBITDA above 2 billion euros. The company announced three new strategic pillars:
- Critical Metals (Gallium): Investment that was announced earlier this year, with the goal that Metlen evolves into the only producer of gallium in Europe, to strengthen alumina capacity and to expand activities in bauxite. There is additional optionality in scandium and germanium.
- Circular Metals: Development of technology for recovery of metal oxides from secondary / industrial streams.
- Defense: Target for EBITDA about 150 million euros in mid-term time, through MRO (Modernisation, Repair, Overhaul) activities and supply of technologies for applications such as unmanned systems.
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