Melrose Industries 'presents compelling investment opportunity', says Citi
By Michele Maatouk
Date: Friday 14 Mar 2025
(Sharecast News) - Citi reiterated its 'buy' rating on Melrose Industries on Friday as it said it "presents a compelling investment opportunity", sending shares in the aerospace manufacturing firm higher.
The bank, which has a 735p price target on the stock, acknowledged investor concerns regarding variable consideration impacting free cash flow.
"However, Melrose forecasts cash flow directly from expected shop visits/deliveries, with EBIT derived from cash," it said.
"We continue to believe the strength of the business lies in the strong, long-term cash generation from RRSPs, which supports the company's projected free cash flow of £600m in FY29."
Citi noted that the stock is now trading at a significant discount to peers, even adjusting for increased risk.
"We therefore believe Melrose presents a compelling investment opportunity."
At 1005 GMT, the shares were up 2.2% at 507.20p.
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