Citi raises Dowlais Group stock target to GBP0.72, keeps neutral

Published 03/07/2025, 04:48 AM
Citi raises Dowlais Group stock target to GBP0.72, keeps neutral

On Wednesday, Citi analyst Sanjay Bhagwani increased the price target on Dowlais Group PLC (DWL:LN) shares to GBP0.72 from the previous GBP0.58 while maintaining a Neutral rating on the stock. Bhagwani’s assessment followed the company’s fiscal year 2024 results, acknowledging Dowlais Group’s solid performance amid challenging conditions.

The analyst noted that Dowlais Group is gradually improving its margins, although the progress is slow due to a decline in volume, which has resulted in substantial restructuring charges and impairments. These factors have also affected the company’s free cash flow (FCF) and net debt, which remains elevated.

Following the FY24 results, minor changes were made to the earnings per share (EPS) estimates for 2025 and 2026 to reflect the new guidance provided by the company. The increased price target to GBP0.72 is a reflection of a more optimistic long-term margin outlook due to solid execution and anticipated improvements in cash flow after portfolio restructuring.

Dowlais Group’s stock has been trading close to 70 pence since the announcement of its acquisition by American Axle (NYSE:AXL), which is significantly lower than the initial offer value. The decline in American Axle’s shares has also been mentioned as a contributing factor. Despite this, the analyst expects that the ongoing offer will continue to support Dowlais Group’s share price.

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