Berenberg lowers target price on Strix
By Iain Gilbert
Date: Thursday 11 Aug 2022
(Sharecast News) - Analysts at Berenberg lowered their target price on kettle controls manufacturer Strix Group from 310.0p to 245.0p on Thursday but said the firm was "not of steam".
Berenberg said Strix's 2020 capital markets day set out the group's plan to double revenue by 2025 but noted that the current market backdrop had raised the question of whether or not this can still be achieved.
The German bank said heightened near-term risks had brought the group's medium-term targets into question but still thinks concerns are overdone.
"With over 86% of kettle manufacturers located in China, we understand why newsflow about weakened economic activity in China and constant lockdowns has weighed on sentiment. Fortunately, due to the location of Strix's factory and its proximity to OEMs, it has not been affected by lockdowns and has been able to operate at full capacity. Strix had several contingencies in place including stock stored offsite, extended operating hours and testing policies to ensure operations were not disrupted; the outlook is now more positive as quarantine in China has been reduced to seven days," said Berenberg.
"We remain confident in the long-term Strix story but prudently update our forecasts and price target to 245.0p in order to reflect the wider macro challenges."
The analysts pointed out that Strix shares were currently trading at a 9.1x full-year 2023 price-to-earnings ratio and 8.0x enterprise value/underlying earnings, which it considers a "compelling" entry point.
Reporting by Iain Gilbert at Sharecast.com
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