The Canadian bank’s analysts said they estimate that Vesuvius’ shares are pricing in around a 20% cut to earnings per share (EPS), however, they see EPS upside supported by self-help
RBC Capital gave a boost to Vesusius PLC (LON:VSV) shares on Monday, upgrading its rating for the metal flow engineering group to ‘Top Pick’ from ‘outperform’ following recent share price weakness.
The Canadian bank reiterated a 700p price target on the FTSE 250-listed group, pointing out that the 20% decline in the stock over three months is the weakest in its coverage.
In a note to clients, RBC’s analysts said they estimate that Vesuvius’ shares are pricing in around a 20% cut to earnings per share (EPS), however, they see EPS upside supported by self-help.
The analysts added: “Our 2020E EPS is c5% above consensus and still does not give full credit for the management margin target of 12.5% (vs a pro forma past peak of c16% on our analysis).”
As a result of the upgrade, they said they had Vesuvius to RBC’s European Equity Small & Mid Cap Best Ideas list.
In late morning trade on Monday, Vesuvius shares were nearly 1% higher at 513p.