On Wednesday, Corbion NV (CRBN:NA) (OTC: CSNVF) experienced a shift in stock rating as Berenberg moved its recommendation from Buy to Hold, despite increasing the price target to EUR26.00, up from the previous EUR24.00. The upgrade in the price target comes after a notable 25% rise in Corbion's share price following the previous upgrade to Buy.
The analyst from Berenberg cited three key reasons for the initial Buy rating: the rapid growth in Corbion's business of selling Omega-3 rich algae-derived oils, the reduction of debt from divestments, and the anticipated recovery in core ingredients volumes. These factors have since been realized, contributing to the stock's robust performance in recent times.
Corbion's earnings report for the third quarter of 2024, released on Monday, October 29, indicated supply-driven pressure on the prices for the bioplastic PLA, a factor that has impacted the company's earnings and makes further EPS upgrades unlikely. This development has influenced the analyst's decision to adjust the stock rating.
The analyst also noted that Corbion's 12-month forward P/E and EV/EBITDA multiples are now broadly comparable to their long-run averages, which suggests that the stock is fairly valued at its current level. With the significant growth factors having been accounted for in the current share price, Berenberg no longer sees the same upside potential that warranted a Buy rating.
The new price target of EUR26.00 reflects the recent achievements of Corbion's business strategy and the subsequent appreciation in stock value, but also aligns with a more tempered outlook on the stock's near-term growth prospects.
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