Jumbo: Optima Bank increases the target price to 16.60 euros, with a ‘purchase’ recommendation

Optima Bank raised the target price for Jumbo’s share to 16.60 euros each, compared to 16.40 euros previously, rephrasing the “purchase” recommendation.

According to the stock market, the upward revision of the target price is based on the exceptionally good cash flows that the company achieved in 2021, as a result of the reduction of working capital needs and record profitability.

The new target indicates a rise of 28% from the current trading level of the stock.

The stock exchange adds that the discounted cash flow model shows a fair price of 20.80 euros per share, however it made a 20% discount due to the low “visibility” in terms of the evolution of the cost of goods sold in the coming quarters, due to increased stock prices and increased transport costs.

Optima Bank expects Jumbo to close the year with EBITDA and record cash flow. As he points out, the company recorded sales of 832 million euros, increased by 20% compared to 2020, and a better profit margin, which combined with strict cost control leads to EBITDA of 280 million euros for 2021, increased by 34% on an annual basis, and net profits of 194 million euros, increased by 40%.

Respectively, it expects that the company will show free cash flows of 238 million euros, bringing the group’s net liquidity to 493 million euros.

At the same time, the stock market revised its forecasts for the size of Jumbo in 2022, and now expects sales of 915 million euros, up 10% year-on-year from a forecast of up 5% previously, EBITDA 274 million euros (down by 2 %) and net profit of 186 million euros (reduced by 11%), as it calculates a decrease of 300 basis points in gross profit margin due to increased stock purchase prices and an annual increase of 11% in operating costs.