REXEL expands in Canada and receives support from a broker before its annual results

REXEL expands in Canada and receives support from a broker before its annual results

(AOF) – Rexel gained 3.4% to 13.37 euros today in Paris, buoyed not only by a very buoyant environment, but also by a double news story that enabled it to significantly outperform its benchmark index, the SBF 120 (+1.74%), as well as its competitors Legrand (+0.97%) and Schneider (+1.78%). The electrical components manufacturer announced this morning the acquisition of the Canadian branch of the American company Wesco International, Wesco Canada Utility (WCU), and also received Berenberg’s support in view of its annual results on February 11.

While no amount has been mentioned regarding the acquisition of WCU, Rexel states that it will provide « better development opportunities in an attractive and resilient business sector », while complementing its product range for its existing entrepreneurial customer base and further expanding its footprint in the country.

Wesco Canada Utility operates through 4 branches across Canada and employs approximately 60 people, with sales of over $70 million. Its product line (pole line material, cable accessories, connectors and transformers) is used primarily for maintenance and upgrade activities. Its customer base is mainly focused on public power generation players and contractors providing services to these generators.

Rexel, which is due to present its annual results for 2020 and submit a « strategic update » next week, also saw this morning the Buy recommendation on its share confirmed by Berenberg, with an unchanged share price target of 17 euros. The broker indeed underlined the fact that the group was growing and had made « smart investments in digitisation, before and during the pandemic, which enabled it to achieve structurally higher and more resilient margins ».

Berenberg added that neither margin prospects nor growth prospects are taken into account in the valuation of the taffy. However, he expects this to change after the strategic update next Thursday. At that event, the analyst also expects Rexel to provide new medium-term margin targets above the current consensus expectation of 5.1%.

Finally, the broker forecasts a medium-term margin of 6%, a final margin of 3.5%, a final growth rate of 1.5%, and still considers that the stock has upside potential of 35%, notably due to its underperformance compared to its competitors since it raised its 2020 targets last December.

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REXEL expands in Canada and receives support from a broker before its annual results
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