On Thursday, Deutsche Bank updated its outlook on shares of Cie de Saint-Gobain (SGO:FP) (OTC: CODYY), increasing its price target to EUR95.00 from EUR86.00. The firm has reaffirmed its Buy rating on the stock. The adjustment reflects an analysis of the company's strategic portfolio changes since 2018, which have significantly improved its profit margins and altered its geographical focus.
The analyst at Deutsche Bank highlighted the company's successful shift in product offerings, emphasizing light and sustainable products. This strategic move has positioned Saint-Gobain as a leading player in the construction chemicals sector, now considered likely the second-largest globally.
The company's mergers and acquisitions (M&A) team has been particularly active, announcing around 100 deals over the past seven years.
Saint-Gobain's M&A strategy has involved more than EUR 16 billion in revenue rotation through both acquisitions and disposals. The company has strategically moved away from distribution channels in the UK, Germany, and the Netherlands, focusing instead on higher-margin sectors such as construction chemicals, which now boast pro forma revenues of EUR 6.5 billion.
The analyst noted that the transition was challenging, including the divestment of a loss-making business that required a "golden farewell." Despite these difficulties, the tangible results of these efforts have led to a substantial increase in margins, which are now well above previous levels and comfortably in the double digits.
The stock price target increase to EUR95.00 from EUR86.00 comes as Deutsche Bank acknowledges these strategic changes and their positive impact on Saint-Gobain's financial performance. The company's focus on higher-margin sectors and successful portfolio optimization have been key factors in the analyst's maintained Buy rating.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.