Cargotec Oyj, a Finnish supplier of cargo-handling equipment, advanced the most in three weeks as Pohjola Bank Oyj raised the stock to buy, citing a turnaround and prospects for future profitability.
Cargotec gained as much as 3.6 percent today, the biggest intraday rise since April 2. Shares of the Helsinki-based company traded up 1.3 percent at 22.39 euros at 3:36 p.m. in the Finnish capital. Volume was about 45 percent of the three-month daily average.
“It’s justified to price Cargotec according to its potential profitability and cash flow model rather than short-term valuation multiples,” Pekka Spolander, an analyst at Pohjola said in a note today. “The target margin of 10 percent is a tough one, but even with more moderate profitability improvements the multiples diminish into very tempting levels.”
Pohjola raised its recommendation on the stock to buy from accumulate. The company has a “strong” balance sheet, which allows investments in improving profitability and later expansion, the bank said.
Cargotec seeks to raise its operating profit margin to 10 percent from 3.9 percent in 2012. Shares in the company have fallen 16 percent from this year’s peak of 26.80 euros on March 19. The company is scheduled to report first-quarter earnings on April 26.