HAMBURG (dpa-AFX) - The investment bank Hauck Aufhäuser IB considers the recent falls in Norma's share price to be exaggerated and believes the time has come for a revaluation. Following an event with Annette Stieve, CFO of the fastening technology specialist, analyst Christian Glowa upgraded the share from "Hold" to "Buy" and raised the target price from 18 to 24 euros. According to his study published on Monday, Glowa sees upside potential of 55 percent.

The Norma Group's weaker earnings performance since 2019 has no structural background, he wrote. Rather, the decline in profits was mainly due to earlier mismanagement and unrest in the company's management. However, the valuation of the share continues to signal lost investor confidence and doubts as to whether the company will ever be able to return to its previous operating profitability. This is due to limited visibility of a sustainable margin recovery, a gloomy environment in the automotive sector and the fact that Norma has issued a series of profit warnings over the past five years.

However, in view of the unbroken strength of the water management business, the share price fall was exaggerated, the expert explained. This division has "equity worth at least EUR 16 per share, which exceeds the current market value of the entire company".

In addition, the new management team has facilitated the operational turnaround at the production site in the Czech Republic, which should finally bring down the excessive material, freight, quality and labor costs. The fact that Norma has recently resumed deliveries of its components to European industrial customers is considered a milestone.

Glowa also pointed out that the new management had taken steps to boost growth and improve the stability of its margins. The aim is to achieve an adjusted operating profit margin of 12 to 15 percent by 2027, while he had previously expected an EBIT margin of 10.8 percent for 2026.

With a "buy" rating, Hauck & Aufhäuser sees sustained upside potential for the share of more than ten percent over the next twelve months./ck/edh/jha/

Analyzing institute Hauck & Aufhäuser.

Publication of the original study: 04.03.2024 / 07:38 / CET First dissemination of the original study: 04.03.2024 / 08:08 / CET