(CercleFinance.com) - Goldman Sachs initiated coverage of Saint-Gobain on Wednesday with a "neutral" rating and a 12-month target price of €110, representing upside potential of 12%.
In a research note, the US bank praised the success of the turnaround strategy implemented over the past six years by the French construction materials group.
Having successfully restored its margins, the company will now have to open a new chapter in its development, explains the New York-based firm, by revitalizing its revenue growth, taking advantage of the cycle currently underpinning the European residential construction sector, and identifying new niches that will enable it to further improve its margins.
However, according to Goldman, these factors are already well reflected in the share price, which means that the renovation market will have to surprise on the upside or the group's growth will have to exceed market forecasts on a structural basis and over a long period of time.
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Compagnie de Saint-Gobain is one of the world leaders in the production and distribution of construction materials for the construction, mobility, healthcare and industrial sectors. The activity is organized around 4 areas:
- manufacturing of high-performance materials: ceramic products (No. 1 worldwide in thermal and mechanical applications for ceramics) and plastics (No. 1 worldwide), abrasive products (No. 1 worldwide) and reinforcing materials (No. 1 worldwide in wire of glass);
- distribution of materials: primarily under the names Point.P in France, Dahl in Scandinavia and Telhanorte in Brazil;
- manufacturing of construction products: exterior products (PVC and façade products, asphalted shingles, etc.), insulation (glass wools, insulating foams, metal ceilings, etc.) and ductwork, industrial mortars, and gypsum materials;
- manufacturing of glass: plate glass, automobile windows, specialty glass (fire and nuclear protection glasses, etc.). The group also transforms and distributes building glass.
Net sales (before intragroup eliminations) are distributed geographically as follows: Southern Europe/Middle East/Africa (33.4%), Northern Europe (28.7%), Americas (27%), and Asia/Pacific (10.9%).
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