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Finnish mining equipment maker Metso Outotec has strong sales growth and its margins are expanding, Royal Bank of Canada said in an analyst note.
RBC gives a "potentially conservative" price target of €11.
RBC gave Metso an "Outperform" rating, saying the risks "heavily skewed to the upside" with shares trading at a 30% discount.
Metso Outotec's 9% 2021-25 organic sales CAGR that RBC forecasts is among the best stocks in the bank's coverage area, with confidence in the company's growth outlook confirmed by the 62% increase in its order book.
The Finnish company's balance sheet is in better shape since its merger in June 2020, with net debt-to-equity falling from 46% to 19%, the bank said.
The company is likely to offset cost and supply headwinds due to its operating leverage and pricing, RBC said.
RBC believes that Metso Outotec is likely to attain the re-rating achieved by Epiroc, with a few more quarters of strong demand and good management.
