On Monday, Borregaard ASA (BRG:NO) (OTC: BRRDF), a Norwegian biochemical company, received an upgrade in its stock rating from Hold to Buy by Berenberg.
The firm also increased the price target for Borregaard’s shares from NOK175.00 to NOK225.00. This adjustment reflects a positive outlook on the company’s evolving business strategy and its ability to adapt in a challenging economic environment.
The upgrade comes after Borregaard’s investor day, which took place on September 18, where the company described itself as being at “the dawn” of its specialization journey. Berenberg’s analysis suggests that Borregaard has already made significant strides beyond this early phase.
The firm recognizes Borregaard as a highly differentiated entity within the chemical sector, with a strong track record of adjusting its product mix to navigate adverse macroeconomic conditions.
Borregaard’s financial performance is highlighted as evidence of its resilience and adaptability, especially over the past two difficult years for the chemical industry. Despite these challenges, Borregaard has demonstrated its capability to maintain and even grow its financial standing.
The journey towards specialization has been beneficial for Borregaard, with its EBITDA increasing significantly over the past years. From an EBITDA of EUR64 million in 2010, Berenberg estimates that it will reach EUR160 million in 2024. This growth trajectory is seen as a testament to the company’s successful strategy and execution.
In addition to commenting on the company’s financial journey, Berenberg shared insights from a recent visit to Borregaard’s Sarpsborg mill and thoughts on the upcoming CEO succession. The firm’s revised investment case for Borregaard reflects a comprehensive review of these elements, underpinning the decision to upgrade the stock rating and raise the price target.
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