(News Bulletin 247) – Degroof Petercam maintained its buy recommendation on Argan on Monday but reduced its target price on the stock, which goes from 94 to 81 euros in order to take into account a higher assumption in terms of average cost weighted capital (WACC).
In a research note, the analyst highlights a company with a ‘solid growth engine’ in the logistics market and good development prospects.
However, he said he is worried about the specter of an upcoming debt refinancing, which he believes could penalize future earnings growth.
After several years of continuous expansion of its asset portfolio, Argan has in fact taken the decision to now focus on its debt reduction and to finance its new projects by selling old ones, he recalls.
Its management team has thus set itself the objective of reducing its debt ratio (net LTV) to bring it back to around 40%, against 45% at the end of 2022, concludes Degroof Petercam.
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