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  • Writer's pictureMark Watson-Mitchell

Liberum predicts SigmaRoc could double

Construction material company SigmaRoc (SRC) has seen its shares slide but Liberum says the market is ‘overestimating’ the impact of a downturn.

Analyst Charlie Campbell retained his ‘buy’ recommendation and target price of 130p on the stock, which closed down 0.4% at 47.4p on Monday.

He said first half results were ‘strong and in line with guidance’, with earnings up 6% despite ‘rapid raw material cost inflation and halts in some customer activity’.

‘We are confident [pre-tax profits] will grow in the second half, as demand holds up, the UPM strike (at a key customer in Finland) will not repeat, and acquisitions mature,’ said Campbell.

‘The shares are down 58% from 2021 highs, as the market overestimates the sensitivity of profits and cashflows in a potential downturn. We think a 35% fall in profits with a 10% free cashflow decline are serious downturn scenarios.’

He added that a joint venture with Arcelor Mittal is ‘another seal of approval in SigmaRoc’s technical and entrepreneurial abilities’.

‘We see over 100% upside to our unchanged target price,’ he said, meaning the shares could double.


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