Stifel resumes coverage on Strix at 'buy'

(Sharecast News) - Stifel resumed coverage of Strix on Thursday with a 'buy' rating and a 54p target price, stating the kettlecontrols specialist had stabilised after a difficult period and was now showing early signs of recovery, helped by improving volumes, cost savings and the completion of its recent tender offer.

The American investment bank said Strix's decision to return around �10m of capital to shareholders via the tender offer, alongside the planned restart of its �10m buyback programme, strengthened the stock's investment case and supported its valuation view.

Stifel highlighted improving posttariff volumes in Strix's controls division, noting that the trend had continued through the first three months of the year. It also noted that surcharges to offset higher copper and silver prices had been agreed with most customers, while Strix's consumer division had returned to growth and sharpened its competitive positioning.

It also pointed to Strix's multipronged effort to rebuild momentum, including the rollout of lowcost and next gen Controls, which it said were delivering early success in reclaiming market share.

While rising plastic costs linked to the conflict in the Middle East remained a potential headwind, Stifel said Strix was working to mitigate the impact through efficiencies, surcharges and new product initiatives. With Strix's sale of Billi leaving the group wellfunded and earnings revisions stabilising, Stifel said the stocks valuation looked attractive given the mediumterm recovery potential.

Reporting by Iain Gilbert at Sharecast.com