Erste increases the target price for the TTS share to 30.4 lei, with more than 20% compared to the current quote

Erste Group recommends "Buy" for Transport Trade Services (TTS) shares, with a target price of 30.4 lei in the next twelve months, according to an analysis report published yesterday on the BVB Research Hub, website, signed by Caius Râpanu.

It is a price objective with 24% above the one in the market yesterday, from 1:00 p.m., of 24.5 lei. In the previous report, which was published on September 19, Erste estimated a target of 25.4 lei for the shares of the freight carrier on the Danube, a quote to which the TTS share price is close.

"Based on recent results and the outlook for year-end 2023, taking into account a conservative scenario for estimates and valuation, we still find generous upside potential for the stock. We maintain our "Buy" recommendation and increase the price target to 30.4 lei/title," the report states.

According to the document, the results published so far this year by TTS have been above expectations, reinforcing the analyst's positive outlook for the company, while creating a basis for new projections, even in a modest scenario. "We saw another record increase in profitability in the third quarter of 2023, well above expectations given the market circumstances of the past six quarters," the report said.

The forecasts related to volumes and tariffs are "cautious", considering the uncertainties created by the war in the region and the impossibility of anticipating a resolution and the moment of ending the conflict. "The volatility and risk perception generated by the war were positive for TTS in terms of rates and volumes. However, we only consider the scenario in which the recent highs will not be reached", the document estimates.

According to the analyst, management's actions are top-notch, prudent and proactive in improving the company's operations. M&A activity (mergers and acquisitions) has positive results, adding value; capital expenditures have considerable expected returns on investment.

"The risk of the recommendation and the price target is related to the difficulty of anticipating developments in the region," the report states.

In the third quarter, the total revenues of TTS amounted to 301.5 million lei, 15.3% above those in the third quarter of last year, while the net profit was 95.3 million of lei, increasing by 27.1%, for the same reporting period.

For this year, Erste estimates that TTS will have a net profit of 337.6 million lei, almost 90% above that of the previous year, which will decrease to 223.6 million in 2024 and 151.9 million in 2025, according to the document .