On Tuesday, Bernstein analysts initiated coverage on Cie de Saint-Gobain (SGO:FP) (OTC: CODYY) with a ’Market Perform’ rating and set a price target of €100.00. The initiation comes as the company, currently valued at $55.7 billion, has demonstrated a consistent ability to meet strategic goals ahead of schedule, instilling confidence in investors despite broader market challenges. The stock has shown impressive momentum, delivering a 32% return over the past year and 28% year-to-date. According to InvestingPro analysis, the company appears fairly valued at current levels.
Saint-Gobain’s "Grow & Impact" strategy, announced in October 2021, was initially met with skepticism. However, the company has since proven its ability to deliver, with the stock recovering to pre-CMD levels by late 2023 and continuing to perform well. This positive trend has been attributed to investors’ growing faith in Saint-Gobain’s execution of its strategic targets, even amid market weakness, particularly in Europe and its domestic market of France.
The company has reported organic growth of 3.9% over the period from 2020 to 2024, aligning with its guidance of 3-5%. Additionally, Saint-Gobain has successfully expanded its operating margin by nearly 400 basis points, from 7.5% in 2020 to 11.4% in 2024. This margin is at the high end of their target range of 9-11%, with an average margin of 10.8% over the last four years.
Looking forward, Saint-Gobain has set its guidance for the fiscal year 2025 at an operating margin of greater than 11%, which would raise the four-year average margin even higher. Bernstein’s analysts believe these margins are sustainable for Saint-Gobain, although they remain below the consensus expectations, which anticipate continued growth in the company’s margins.
In other recent news, Deutsche Bank revised its price target for Cie de Saint-Gobain to €92.00 from €96.00, while maintaining a "Hold" rating on the stock. Analysts from Deutsche Bank, including Matthias Pfeifenberger, projected a slight organic sales decline of 1.8% year-over-year for the first quarter, primarily due to lower volumes and fewer working days. Despite this, they forecast an overall year-over-year sales increase of 1.6%, driven by a positive scope effect of about 4% from recent acquisitions. Saint-Gobain’s portfolio expansion includes acquisitions of Bailey, FOSROC, Cemix, and CSR. The report also noted a forecasted negative foreign exchange impact of approximately 0.5%, influenced by the weakening of several currencies such as the Brazilian Real, Mexican Peso, and Canadian Dollar. These developments reflect the company’s ongoing adjustments and strategic acquisitions in its business operations.
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