Jefferies recently started covering Metso OYJ (METSO:FH) (OTC: MXCYY) with a Hold rating and a price target of €9.40. The firm highlighted positive signs of recovery in the company's Minerals order intake, but also pointed out challenges in revenue growth that could impact margin improvement in this division.
The analyst mentioned that the near-term outlook for Metso's Aggregates division is tough, particularly in core European and US markets, due to current market conditions affecting performance. Concerns were also raised about working capital and cash conversion processes, which could impact the quality of earnings and investor confidence.
With a price target implying a modest 5% upside, the coverage initiation provides a comprehensive view of Metso's financial health and market position, balancing potential for recovery with existing challenges.
Analysis:
In summary, Jefferies' coverage on Metso OYJ sheds light on both the positive and negative aspects of the company's current situation. While there are signs of recovery in the Minerals division, challenges in revenue growth and tough market conditions in the Aggregates division pose obstacles. The concerns about working capital and cash conversion processes also raise questions about financial management. Investors should consider these factors when evaluating their investment decisions in Metso OYJ.