Jefferies analyst David Farrell maintained a Buy rating on Coats Group plc (COA – Research Report) today and set a price target of p130.00.
David Farrell has given his Buy rating due to a combination of factors that highlight Coats Group plc’s promising financial outlook. The company’s performance in FY24 slightly exceeded expectations, with improvements across its profit and loss statement and a reduction in net debt. Coats has introduced new medium-term financial targets that, if met, are expected to enhance its earnings growth more robustly than in the past, addressing previous investor concerns and presenting opportunities for a positive re-rating of the stock.
Additionally, Coats has maintained a target of over 5% organic revenue growth, with specific growth drivers identified in adjacent markets such as Coats Digital and various industrial applications. These markets collectively represent a significant opportunity, valued at $1.3 billion and growing at over 5%. The company’s EBITA margin target of 19-21% offers potential upside compared to current market consensus. Furthermore, Coats’ capital allocation strategy, including potential mergers and acquisitions or share buy-backs, aims to achieve an EPS compound annual growth rate of over 10% from a 2025 base. The forecasted free cash flow generation of over $750 million over five years aligns with the company’s financial projections, supporting the Buy recommendation.
According to TipRanks, Farrell is ranked #1669 out of 9384 analysts.
In another report released on February 26, RBC Capital also maintained a Buy rating on the stock with a p125.00 price target.
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