Berenberg Starts Ternium S.A. (TX) at Buy

November 23, 2016 6:37 AM EST
Get Alerts TX Hot Sheet
Price: $23.64 +2.34%

Rating Summary:
    5 Buy, 4 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 24 | Down: 17 | New: 14
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Berenberg initiates coverage on Ternium S.A. (NYSE: TX) with a Buy rating and a price target of $28.50, saying its exposure to Mexico is more of an opportunity than risk.

Analyst Alessandro Abate commented, "We initiate coverage of Ternium with a Buy recommendation and a price target of USD28.50. Our valuation is based on a 4.5x EV/EBITDA multiple on our 2017E EBITDA. The recent pullback of the stock due to a perceived negative effect on the Mexican economy from potentially more stringent US protectionist measures is overstated, in our view. Ternium’s leadership in the fast-growing premium markets (Mexican automotive and white goods), just as the Mexican peso depreciates, is a further catalyst for our positive stance on the stock. The company benefits from a stable FCF which is very supportive for both shareholder returns and investments into value-added products that remain key for solid margins in the long term. The potential M&A upside increases the appeal of the stock, adding support to valuation if a joint venture with thyssenkrupp CSA/Brazil materialises. We would not exclude the possibility of a revaluation of the Usiminas stake if the economic outlook in Brazil improves."

For an analyst ratings summary and ratings history on Ternium S.A. click here. For more ratings news on Ternium S.A. click here.

Shares of Ternium S.A. closed at $24.15 yesterday.

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