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(Sharecast News) - Citi lifted its price target on Dowlais on Friday to 72p from 58p following the company's full-year results earlier in the week.
It said that Dowlais once again demonstrated a solid execution in a very difficult business.
"DWL is making some slow progress on margin improvement, but this is tough in a falling volume environment, as demonstrated by significant restructuring charges and impairments, also impacting free cash and net debt, which remains high," the bank said.
"Post FY24 results, we make low single digit changes to our 2025-26E earnings per share estimates to account for the new guidance but raise our TP to 72p from 58p reflecting a better long-term margin outlook (solid execution) and improved cash flow (after portfolio restructuring)."
Citi noted that Dowlais shares have traded near 70p since the acquisition announcement with American Axle, which is well below the initial offer value, as AAM shares have also declined.
"We expect the offer continues to support the shares," said Citi, which maintained its 'neutral' rating on the stock.
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