6 16
QUARTERLY OVERVIEW
6
Prysmian Group Insight
On track to meet FY target
Market analysts on an upbeat note
Although the macroeconomic
environment in the first few months
of 2014 showed signs of stabilisation
and slight improvement, recent
months have witnessed a gradual
slowdown in economic activity,
particularly in Europe and Brazil.
In such a context, the Group’s
expectation for FY 2014 is that
demand for medium voltage cables
for utilities will remain weak, and
that the gradual recovery in the
building wires business seen in the
first nine months of the year will
Several major brokers expressed
a positive view on Prysmian stock
outlook after the release of the
results for the first nine months
of the year. BofA Merrill Lynch
said the results were “solid” and
issued a Buy recommendation.
Both Credit Suisse and Mediobanca
upgraded their recommendations
to Outperform from Neutral, based
on an attractive risk reward and
Western Link
progress seen
The execution of the Western Link
project is on track, with Prysmian
confirming its ability to manage
unexpected issues and protect its
reputation. Chief Financial Officer,
Pier Francesco Facchini, said
that the Group does not foresee
any additional costs or delays in
the project after some technical
problems were encountered earlier
this year.
Prysmian Group confirms Adjusted EBITDA for 2014 at the lower end of the target
range of €506–€556 million
continue until year end. The Group
also confirms the positive trend in
demand in the high value-added
businesses of power transmission,
particularly submarine cables, as
well as consolidation of the upturn
in demand for optical fibre cables.
Against this background, the results
of the first nine months and the
size of the current order book let
the Group confirm Adjusted EBITDA
for FY 2014 at the lower end of the
target range of
€
506-
€
556 million
(
€
600-
€
650 million excluding the
negative impact of Western Link).
Target Price*
Brokers’ Recommendation*
Min
Neutral
Positive
0
5
10
15
20
25
Average Max
14.2
17.3
20.0
40%
*Based on 20 brokers,
last update November 19, 2014
60%
sound demand in Telecom. Morgan
Stanley reiterated its Overweight
recommendation noting that results
should materialize into a positive
inflection for the share as well as
confirming Prysmian’s ability to
deliver in a difficult “cables context”.
Natixis upgraded its rating to Buy
from Neutral on confirmation of
the cost overruns on the Western
Link contract and the good
showing in underlying earnings in
Utilities. Citi and Equita maintained
their Neutral and Hold ratings
unchanged, highlighting Prysmian’s
outperformance in the cable
industry while waiting for some
recovery in market demand.