On Thursday, Citi reiterated its Neutral rating on Sika AG (SIX:SIKA:SW) (OTC: SKFOF) shares, maintaining the price target at CHF 275.00. The firm's analysis projects a third-quarter revenue of CHF 3,146 million, marking a 1.4% year-over-year increase and a 0.9% like-for-like (LFL) growth, along with an EBITDA of CHF 651 million, which would represent a 4.8% increase from the previous year.
The positive growth trajectory observed in the previous quarter is expected to have persisted into the third quarter. The analyst noted that the current input cost environment is beneficial for potential margin expansion. The Europe, Middle East, and Africa (EMEA) region is anticipated to experience further growth, supported by a gradual recovery in Germany, robust growth in France and Italy, and sustained healthy demand in the Middle East and Africa.
In the Americas, demand is forecasted to remain favorable, with volume growth being propelled by non-residential and infrastructure spending. Moreover, Latin America is expected to contribute positively to the company's performance.
The Asia Pacific (APAC) region, however, presents a more complex scenario due to Sika AG's significant exposure to the Chinese market, where a sluggish project business has overshadowed growth in the distribution sector. Despite signs of potential improvement in China due to stimulus measures, the impact remains to be seen.
The automotive sector continues to face challenges, with a notable decline in the EMEA region offsetting recovery in the United States and growth in Asia. This sector's performance remains subdued, impacting the overall outlook for the company.
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