On Tuesday, Deutsche Bank began coverage on Azelis Group NV (AZE:BB) stock, a specialty chemical distribution company, assigning a Hold rating with a price target of EUR20.40.
The firm's analysis highlighted Azelis' significant growth in gross profit, averaging 16% annually from 2015 to 2023, with organic growth accounting for 9% of this figure. This performance places Azelis as the third-largest specialty chemical distributor by revenue.
Despite Azelis' growth and its relatively small market share of approximately 2%, which indicates potential for further expansion both geographically and in product offerings, Deutsche Bank pointed out current industry challenges.
These include weak demand within the industry, declining prices, and the impact of higher interest rates. These factors are contributing to growth rates that are currently below the company's historical trend.
The bank's report suggests that these conditions might persist, potentially keeping future growth subdued. Azelis' past growth trajectory has been compared to its competitor IMCD, which has achieved a 10% organic growth rate. The comparison underscores Azelis' competitive position in the market despite the current headwinds.
The price target of EUR20.40 set by Deutsche Bank reflects the bank's assessment of Azelis' value in light of the various factors affecting the industry and the company's performance. This valuation is informed by the company's historical growth rates, market position, and the current economic environment that may influence its operations.
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