Zumtobel raised to BUY, TP EUR 8.0 - Recovery potential not adequately reflected in valuation
We upgrade Zumtobel to BUY from HOLD with a new target price of EUR 8.0 (EUR 7.5)Having been exposed to material top-line pressure in Q1-3, we assume that headwinds should ease going forward due to easier comps and a more favourable development of the order book
Cost control has been compelling throughout the crisis, in our view, and a late-cyclical recovery would allow for operating leverage to turn positive
We consider the valuation very attractive with EV/EBITDA of just 4.1x on this years (Covid-19 impacted) figures, falling to 3.4x on FY 21/22e. The group should be able to sustain double-digit FCF yields throughout the forecast horizon
Zumtobel is a lighting company based in Austria. Co. offers a full-line range of integral professional lighting solutions, luminaires, light management systems and lighting components for indoor and outdoor applications. Co.'s business activities are carried out primarily through its subsidiary groups: the Lighting Segment (lighting solutions, interior and exterior lighting, electronic-digital lighting and room management systems) and the Components Segment (electronic and magnetic lighting components).
The Institutional Equity Research team of Raiffeisen Bank International AG covers 85 stocks from Austria, Central & Eastern Europe with sell-side research and thus levers our local broker status with excellent company relationships. For corporates in Austria, CEE and Western Europe, we offer co-sponsored research, which includes research coverage and marketing activities to investors. Additionally, through our Spotlight Research product we also shed light on leading European small and micro-caps, seeking greater visibility with investors.
The Institutional Equity Research team consists of roughly 15 analysts, both in Vienna and the CEE countries. Our analysts provide long-standing sector expertise in tandem with profound local market know how and a sectoral approach across the entire region.
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