On Thursday, Citi updated its assessment of Alfa Laval AB (ALFA:SS) (OTC: ALFVY), a leading global provider of specialized products and engineering solutions. The firm increased the price target for Alfa Laval's shares to SEK430.00 from the previous SEK377.00, while keeping a Neutral rating on the stock.
The adjustment follows Alfa Laval's recent performance, where the stock has reached new highs and outperformed the SXNP index by 10% over the past month.
Alfa Laval's management is scheduled to present at an Industrials conference tomorrow. This event comes after the CEO's presentation at a Global industrials conference in Miami a month earlier, on February 21, 2024. The company's stock has recovered from earlier underperformance and is now approximately flat year-to-date.
The upward movement in stock price is attributed to a strong February Marine contracting print and growth in the datacenter business driven by artificial intelligence, despite a low starting point. Additionally, management has expressed confidence in dealing with the current weakness in the heat pump and general HVAC markets.
The company's enterprise value to EBITA (EV/EBITA) premium has decreased to 20% from a 35% peak, which was a factor when Citi previously downgraded the stock to Neutral in September 2023. Despite Alfa Laval's low single-digit exposure to the datacenter market, which is significantly lower than competitors like Schneider with over 20% exposure, there is caution regarding the Marine orders.
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