On Wednesday, Barclays (LON:BARC) adjusted its outlook on Saipem stock, raising the price target to EUR3.20 from the previous EUR2.90 while maintaining an Overweight rating. The revision follows Saipem's robust second-quarter performance, which the firm noted had a book-to-bill ratio exceeding 1.5 times according to their calculations.
The investment bank's decision to increase the price target is underpinned by the continued recovery of Saipem's business operations and a strengthening backlog. These positive developments have led Barclays to reduce the discount rate applied in their discounted cash flow (DCF) analysis to 11%, which in turn has justified the higher price target for Saipem shares.
Saipem, which trades on the Italian Stock Exchange under the ticker SPM:IM and is also available over the counter (OTC) with the ticker SAPMF, has demonstrated a performance that aligns with Barclays' positive stance.
The Overweight rating indicates that the firm expects the stock to outperform the average total return of the stocks in the analyst's coverage universe over the next 12 to 18 months.
The upgrade in Saipem's price target reflects Barclays' confidence in the company's ability to sustain its positive trajectory. The firm's analysis suggests that the lowered discount rate and the resulting increase in the price target are warranted by Saipem's recent financial outcomes.
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