Buy recommendations on De’ Longhi, Akros and Intermonte raise target prices

(Il Sole 24 Ore Radiocor) – Making good progress De'longhi on the Milan Stock Exchange. Supporting the share price, on the one hand, is yesterday’s announcement of a agreement to acquire the entire stake held by DLI Limited in the professional division, increasing its own stake from 61.56% to 88.02% for a total cash outlay of approximately 662.5 million euros. On the other hand, analysts at Banca Akros and Intermonte have decided to raise their target price for the share.

Specifically, Akros has raised its target price from the previous 50 euros to 54 euros. This is based on the brokers’ expectation that the company will deliver “another quarter of growth, driven once again by the professional segment, for which we forecast double-digit growth (+14%)”. This forecast for the third quarter “takes into account the guidance provided yesterday by the company, according to which the Professional division is expected to achieve turnover in excess of 600 million euros in 2026. This implies growth of around 14 per cent in the second half of 2026”. In detail, the coffee segment aimed at end consumers (B2C) “is expected to record modest growth, in the region of a few percentage points”, the brokers write, emphasising that “growth is expected to be seen across all geographical areas”. Furthermore, “the profitability of the Professional segment, with an expected EBITDA margin of around 30 per cent, should drive positive operating leverage”. As regards net financial debt, “it should reflect the normal dynamics of net working capital, net of the impact of the share buyback programme”. In light of this, “we have revised our earnings per share estimates and target price upwards, raising it from 50 to 54 euros, and we confirm our ‘Buy’ recommendation”.

The new valuation, the experts note, also takes into account the transaction relating to minority stakes in the Professional segment. In this regard, whilst noting that the consideration for the acquisition of the additional stake amounted to 662.5 million euros, the experts estimate that ‘approximately €500 million will be financed through debt, amounting to around €250 million net of certain debt facilities maturing next year’. As part of the transaction, the remaining minority shareholders, comprising executives and other shareholders, will retain their stake in the company. The minority shareholders will also retain the right to proceed, alternatively, with the listing of the Professional division on the stock exchange from March 2028 or with its spin-off from March 2029. “We are valuing the business by applying a multiple of 15 times EBITDA,” they write in the report. Given that this multiple stood at 13.7 times based on EBITDA for the last twelve months, net of non-recurring items and costs relating to share option schemes, “and that our valuation also included around six months of further growth, we believe the actual multiple is slightly more favourable than our initial assumption. Consequently, we view the news positively”. Furthermore, the company has stated that sales of Professional coffee are expected to exceed €600 million in 2026, representing growth of 23–24 per cent, “compared with our Bak (Best Available Knowledge) estimate of 21 per cent (€592 million). We are adjusting our forecasts accordingly, whilst leaving our full-year adjusted EBITDA estimate unchanged. We have also included the consideration for the transaction in our cash flow forecasts and updated our estimates relating to minority interests.” Assuming that the financial impact of the transaction is essentially nil, as the company bears only the spread between the cost of debt and the return on the cash allocated to the investment, ‘the net result is a 9 per cent increase in our earnings per share estimates for 2027 and 2028’. In light of this, ‘we are updating the valuation based on the sum of the parts (Sum of the Parts, SOP), shifting the reference to 2027 to better reflect the effects of the changes described above, whilst keeping the multiples applied to the B2C and B2B coffee segments unchanged at 12 and 15 times EV/EBITDA respectively’. Analysts note that competitor companies operating in the professional and consumer segments, such as Breville, SharkNinja and Rational, “are trading at an average multiple of 15.6 times the estimated EV/EBITDA for 2027”.

Positive feedback has also come from Intermonte

Intermonte is also on the same wavelength, confirming its Outperform recommendation on the share and raising the target price from 46 to 51 euros. Analysts explain that this decision is based on “a valuation that gives equal weight to the discounted cash flow method and the sum-of-the-parts valuation. The revision reflects the growing contribution and strategic value of the Professional Coffee division”. In particular, De’Longhi’s acquisition of a further 26.46 per cent stake in the division, at an EV/EBITDA multiple of 13.7 times the EBITDA for the last twelve months, “represents an attractive capital allocation opportunity. The transaction increases the group’s stake in its fastest-growing and most profitable business, whilst maintaining a strong net cash position.”