Berenberg announced on Monday that it had raised its price target for Rexel from €25 to €27, while maintaining its Buy recommendation on the electrical equipment distributor's stock.
In a research note, the financial intermediary points out that with a PER of 9x and a free cash flow (FCF) yield of over 10%, the share is trading at historic lows despite a share price that has more than doubled in three years.
Berenberg points out, however, that the manufacturers of the products Rexel sells - namely Schneider, Legrand and Rockwell - are all trading close to, or even above, their all-time highs, a phenomenon he considers perfectly justified.
The analyst deduces that Rexel's valuation multiples are likely to start catching up, a factor which he believes could lead to an upward movement in the share price.
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Rexel is the world's leading professional distributor of electrical equipment. Present in 19 countries, the Group offers electrical products and solutions to professionals for buildings and for residential, industrial, and tertiary infrastructures, through a multi-brand network of 1,972 outlets. The products and solutions marketed by the group are in response to demands for electrical equipment, lighting, security, climate control, communication, industrial automation, and energy savings. The activity is organized around 3 markets:
- tertiary: malls, sports facilities, hospitals, airports, etc.;
- industry: system integrators, production site builders and equipment producers;
- residential: comfort, security, and home automation.
Net sales are distributed geographically as follows: Europe (50.2%), North America (43%) and Asia/Pacific (6.8%).
REXEL 
