Berenberg reiterates 'buy' rating on Eurocell

Analysts at Berenberg reiterated their 'buy' rating on UPVC products manufacturer Eurocell on Thursday as the group continued to make market share gains.

Berenberg said Eurocell's first-half results were "robust", with the group delivering 13% revenue growth, maintaining guidance, and continuing to win new fabricator customers, supporting 2023 forecasts.

The German bank stated that with Eurocell shares now trading on a 7.8x price-to-earnings ratio, it thinks they are "compelling" given several company-specific tailwinds - including market share gains, favourable sustainability tailwinds, and margin benefits from new facilities.

Berenberg also expects the group to end 2022 with leverage of 0.3x net debt/underlying earnings, aided by a reduction in inventory, leaving plenty of optionality.

"As the benefits of the new facilities come through, we believe management's focus can shift towards M&A and supplementary cash distributions," said the analysts.

Berenberg also maintained its 310.0p target price on the stock.

Reporting by Iain Gilbert at Sharecast.com