Aalberts gains as BofA upgrades to "buy"

Investing.com -- Shares of Aalberts Industries NV (AS:AALB ) jumped over 5% on Friday after BofA Securities upgraded the stock to "buy" from "underperform," signaling a shift in market sentiment regarding the Dutch industrial company. 

Analysts at BofA cited an anticipated recovery in key end markets, expected to account for more than 65% of Aalberts’ sales, as a pivotal factor supporting this re-rating.

Aalberts, which has faced challenges in the automotive, construction, and general industrial markets, is projected to experience a significant turnaround starting in 2025. 

BofA analysts noted that visibility in the semiconductor pipeline and resilient aftermarket trends in construction are likely to underpin a recovery. 

The brokerage raised its price target for Aalberts to €41, up from €35.5, reflecting improved earnings expectations and a potential re-rating of the stock, which has been trading at multi-year lows relative to peers.

The company’s focus on portfolio optimization, including disposals of lower-margin businesses, is expected to enhance margins and cash flow over the next 12 to 24 months. 

Aalberts aims for a long-term EBIT margin target of 16–18%, supported by ongoing operational improvements. 

Despite near-term headwinds in automotive production and muted industrial activity, analysts highlighted that Aalberts’ long-term fundamentals remain robust.

The stock's valuation, currently at a discount to its historical trading range and broader sector multiples, further underscores its potential upside. 

As construction and semiconductor markets rebound, BofA anticipates Aalberts will regain earnings momentum, aligning its valuation closer to historical norms. 

This optimism marks a turnaround from the stock's 27% decline relative to the broader European capital goods index year-to-date.

Source: Investing.com