Shares in stainless steel maker Aperam (Other OTC: APEMY - news) rise to their highest level in nearly two years after the Luxembourg-group reports far higher-than-expected fourth-quarter core profit than expected.
The shares rise as much as 11.3 percent to 15.12 euros, their highest level since March 21, 2012. At 1120 GMT, they are trading up 10.3 percent at 14.99 euros, comfortably the strongest performer on Euronext Amsterdam.
Rabobank raises its rating on the stock to 'Buy' from 'Hold' and its price target to 17 euros from 13. It says it was encouraged by the core profit and net debt reduction in the fourth quarter, the forecast of further improvement in the first quarter and an extra $50 million of cost savings.
It also says that ThyssenKrupp (Xetra: TKA.DE - news) 's buy back of Italian steel plant Terni from Outokumpu (Other OTC: OUTKF - news) means the risk of a heavy equity dilution for Aperam, a potential purchaser, has gone.
Rabobank says Aperam was trading at five times enterprise value over expected 2015 core profit (EBITDA), too large a gap with peers Outokumpu and Acerinox (Frankfurt: ACE1.F - news) , at nine and eight times, respectively, and its price-to-book value was a mere 0.5, while its balance sheet was now under control.
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