Last checked at 
(Sharecast News) - Canaccord Genuity initiated coverage on manufacturer and power products provider Volex with a 382.0p target price and a 'buy' rating on Thursday, stating the group was compounding value to power accretive growth.
The analysts said Volex served "a well-diversified customer base" and was differentiated through scale, with a global manufacturing footprint that provides localised support and "a market-leading reputation" for quality.
Canaccord highlighted that Volex had completed a "transformational turnaround" that had restored profitability and cash generation, leaving the group well placed to exploit multiple levers of growth - targeting $650.0m of revenue and 10% operating margins within three years.
The Canadian bank added that Volex was supported by "a healthy balance sheet" and a new $70.0m revolving credit facility, with a $30.0m accordion, and expects value to be driven through an accretive buy and build strategy, enabling the firm to consolidate fragmented markets and move up the value chain.
Canaccord also noted that Thursday's €61.8m acquisition of DEKA, a leading manufacturer of power cords, fits in with this strategy.
"Near-term organic catalysts exist in data centre products (growing at over 50% vs 2H'20) and EV where Volex is the sole source with a leading US-based OEM," added Canaccord.
26 Feb 2016 09:46