RE: VSVS18 Oct 2019 13:16
Immense value in Vesuvius, says Peel Hunt
A profit warning from ceramic mould engineer Vesuvius (VSVS) has not dented Peel Hunt’s faith in its ‘robust’ business model and its belief in ‘immense value’ over the long term.
Analyst Harry Philips retained his ‘buy’ recommendation but reduced the target price from 715p to 600p. The shares are down 16% since Tuesday’s profit warning and were yesterday trading at 348.8p.
Vesuvius substantially downgraded its outlook out to 2021 on a weaker global economy and a ‘major realignment’ in UK industrial forecasts.
‘The key factor is that the business model remains robust and will continue to take share so our confidence in the broader investment proposition remains unchanged but we accept that in the short term, investors are understandably going to want to see the dust settle,’ said Philips.
He said there was ‘immense value in the company which is now trading on 2020 price/earnings of just 8.1 times with a dividend yield of 6%’.