Colt CZ Group SE: aiming high (stays BUY)
Post Colt CZ Group’s FY21 audited financials (released on 29 April), we have rolled over our valuation model, and revised our earnings forecasts, for our updated macro and KPI assumptions, in light of the recent paradigm shift, as NATO/European governments boost defence spending and recalibrate their security strategies, following the Russian invasion of Ukraine. Following its acquisition of the iconic US firearms producer, Colt Holding (May 2021), removing the entry barriers to the sizeable US military and law enforcement – MLE – market and expanding its previously very limited production base in North America, Colt CZ is among the largest global firearms manufacturers, active in more than 90 countries, with several well-established brands; and, in our view, is due a windfall, as Western governments re-prioritise military modernisation. As a result of our forecast increases, our 12-month price target (PT) of CZK 719/share is now 36% higher and offers 21% potential upside, and we maintain our BUY rating on the stock. In this report, we also start to use the new name of the combined Colt-CZG entity, following the recent change in the company’s registered name to “Colt CZ Group SE” (Colt CZ) from “Česká zbrojovka Group SE” (CZG).
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
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Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
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