Berenberg raises target price on Volution following ClimaRad acquisition

Analyst at Berenberg raised their target price on ventilation products supplier Volution Group from 315.0p to 345.0p on Friday, stating the company's "strategically attractive" acquisition of ClimaRad.

Berenberg said Volution's acquisition of ClimaRad, a manufacturer of decentralised heat recovery ventilation in the Netherlands, was not only immediately earnings-enhancing but also added to the firm's product portfolio, providing further cross-selling opportunities.

The German bank highlighted that the business was "well placed" to benefit from structural and regulatory tailwinds like the European Green Deal renovation wave, given that its products aid the decarbonisation of heating and cooling.

"Combined with supportive regulation, an increasing focus on indoor air quality and a strong balance sheet, Volution remains an ESG gem," said the analysts, who maintained their 'buy' rating on the stock.

Berenberg incorporated the business into its forecasts from December 2020, which brought about a roughly 4% and 7% increase to its 2021 and FY 2022 estimates, respectively, leading it to state Volution's shares were now trading on a 15.8x 2021 price-to-earnings ratio with a 7% free cash flow.