Berenberg raises target price on Volution

(Sharecast News) - Over at Berenberg, analysts hiked their target price on ventilation equipment business Volution to 600.0p from 500.0p on Wednesday following the group's full-year trading update. Berenberg stated that while the macro backdrop has "remained challenging" given subdued levels of new construction activity, high interest rates and weak consumer confidence, Volution has continued to be "resilient", with management confident about the brands and strategy.

Overall revenue for FY24 was up by 7% year-on-year in constant currency terms, of which slightly over 1% was organic growth.

As the German bank flagged back in March, key focus points were the strength of the outperformance in Volution's UK residential division, a resilient performance in Europe given the market weakness, further delivery of strong adjusted underlying earnings margins, and very clean cash conversion that leaves the business at 0.5x EBITDA pre-leases and well positioned for future consolidation.

"With the company guiding to a 'slight' increase in adjusted earnings per share versus prevailing consensus expectations, we increase our FY24 numbers by circa 1.5%," said Berenberg, which has a 'buy' rating on the stock.

"As such, with Volution shares also performing well and recently breaking through our prevailing 500,0p price target, we have increased our price target to 600.0p to reflect this change in peer multiples, and our ongoing confidence both in the company's strategy and its ability to participate in the expected recovery in end-market demand."

Reporting by Iain Gilbert at Sharecast.com