On Wednesday, Berenberg adjusted its outlook on Mersen SA (MRN:FP) stock, a French multinational known for its expertise in advanced materials and electrical components. The firm lowered the price target for Mersen's shares to EUR41.00 from the previous EUR45.00, while still endorsing the stock with a Buy rating.
Mersen, recognized for its production of heat- and corrosion-resistant graphite products, is also a key player in the power electronics sector, providing essential components like fuses and busbars.
The company is in the midst of implementing a strategic mid-term plan that is expected to yield approximately 40% revenue growth over the next four years. This anticipated increase is largely attributed to the rising demand for high-purity graphite, which is essential for the silicon carbide (SiC) industry.
Despite Mersen reaffirming its financial targets for both 2024 and 2027, the company's shares have been underperforming. The analyst from Berenberg suggests that the current stagnation in share performance can be primarily linked to the sluggish momentum of the electric vehicle (EV) market.
SiC production, which is critical for EVs, is projected to consume over half of the output, and the current EV market dynamics are believed to be influencing investor sentiment.
The analyst at Berenberg acknowledges the challenges posed by the present EV market conditions, which may hinder a near-term revaluation of Mersen's shares. Nevertheless, the firm considers the current valuation of the company's stock to be reasonable and maintains a positive outlook on its potential.
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