On Tuesday, ams OSRAM AG (AMS:SW) (OTC: AUKUF) stock received an upgrade from UBS from Neutral to Buy. The firm also increased the price target for the company's shares to CHF1.60, up from the previous CHF1.20. The upgrade comes after a period of significant transformation for the company, which included operational restructuring and balance sheet improvements.
ams OSRAM has been undergoing changes since 2020, following the acquisition of OSRAM. These changes involved operational restructuring and balance sheet deleveraging, set against the backdrop of a pronounced industry cycle. The UBS analyst pointed out that the immediate liquidity and leverage concerns for ams OSRAM are now limited, and the company has a clear path toward further deleveraging.
The industry upcycle is expected to support this path to deleveraging and is anticipated to contribute to a re-rating of the company's stock. The analyst also noted that after recent disappointments, the risk to consensus numbers is now skewed to the upside, which is a positive sign for potential investors.
The upgrade to a Buy rating indicates a roughly 70% upside implied by the new price target. Moreover, the analyst suggests that there is a potential for the share price to triple in an optimistic scenario. This outlook presents a significant turnaround from the company's recent challenges and reflects confidence in its future performance.
Analysis:
The upgrade of ams OSRAM AG (AMS:SW) stock to Buy by UBS and the increase in price target to CHF1.60 indicate a positive outlook for the company. This upgrade comes after a period of transformation and improvements, showing potential for further growth. The industry upcycle and expected deleveraging are key factors contributing to the positive sentiment. Investors may consider this upgrade as an opportunity for potential gains in the stock price.