PRYMF - Prysmian: Recent Acquisitions To Benefit - Upgrade To Buy
2024-04-16 06:05:20 ET
Summary
- The recent acquisitions of Warren & Brown and Encore Wire strengthen Prysmian's position in the connectivity and cable markets, respectively.
- In particular, the Encore Wire deal is EPS accretive even without synergies.
- Supportive trends ahead, solid M&A execution, and a strong track record make Prysmian stock a buy.
Following two bolt-on acquisitions in less than a week, today we are back to comment on Prysmian (PRYMF). Before going into the financial details, it is essential to note that we initiated the company with a buy rating in October 2023. After a 30% plus in stock price performance , we decided to move our rating to neutral rating - Well On Track To Deliver The 'Connect To Lead' Results . That said, we report the following key takeaways:
- The company has secured key contracts in the energy space, which provides better visibility into Prysmian's order book. We also emphasized lower commission cancellation risks;
- Given the solid balance sheet and considering a dividend uplift, there is an M&A upside. The company's net debt/EBITDA is lower than 1x;
- Our equity story was also backed by Supportive Trends Ahead : high-voltage commission, more efficient grid requirements, and higher needs for renewable energy.