On Wednesday, HSBC updated its stance on Lanxess AG (ETR:LXSG) (LXS:GR) (OTC: LNXSF), increasing the share price target to €26.00 from the previous €25.00, while reiterating a "Hold" rating.
The financial institution's analysis suggests that the adjusted EBITDA forecast for the fiscal year 2024 remains largely the same. However, the projection for 2025 has been adjusted upwards by 8% to reflect anticipated cost-saving benefits.
The valuation of Lanxess by HSBC employs a 6x multiple, which underpins the revised target price. The rationale for maintaining the "Hold" rating is based on Lanxess's proven ability to undergo successful restructuring. Despite this, the company is currently navigating through several challenges, including the possibility of a downward revision in consensus expectations.
HSBC's commentary indicates that Lanxess shares are expected to stay within a certain range for the time being. This outlook is tied to the need for greater clarity in the earnings forecast and the resolution of debt-related concerns. The firm's assessment highlights the balance between the company's restructuring success and the current obstacles it faces.
Lanxess AG, a specialty chemicals company, is known for its strategic initiatives aimed at improving efficiency and reducing costs. The update from HSBC suggests that while the company's efforts are recognized, investors may adopt a cautious approach until there is more certainty about Lanxess's financial performance and debt situation.
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