Berenberg Starts Allegion (ALLE) at Buy
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Berenberg initiates coverage on Allegion (NYSE: ALLE) with a Buy rating and a price target of $80.00.
Analyst Rizk Maidi commented, "Although the shares have outperformed the S&P industrial index by 25% since its spin off from Ingersoll Rand in 2013, we think there is still value to be unlocked. Despite weaker growth assumptions for US construction spending, we expect Allegion to grow revenues at a 5.5% organic CAGR through 2020. A combination of high operating leverage in Americas and cost savings in EMEIA (Europe, Middle East, India and Africa) and Asia-Pacific will lead margins to grow by 380bp by 2020. The company has a top notch US business (70% of sales) but, outside that region, its operations are subscale and need to grow through M&A – Allegion can spend up to 10% of its market cap on acquisitions. The shares trade at an undeserved 10% discount to its European peers."
Shares of Allegion closed at $67.55 yesterday.
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