Financial Trading Blog
Stock of the day 19/02/2015 – Essentra PLC
The plastic and fibre producer will be justifiably disappointed by its 2014 market performance, especially after the stellar year of growth in had in 2013. It started last year at £8.55, and peaked in early March at a price of £9.28. After this point Essentra declined for much of the year, with a brief moment of respite at the start of September as prices grew back to £8.70. However it then suffered a precipitous fall in mid-October, a slump suffered by so many companies in 2014, culminating in its year low price of £6.24. Yet Essentra dusted itself off and managed to open 2015 at £7.31, before undergoing a transformation in 2015 that now sees it being traded at £8.96, not far from its March highs.
The reason for this New Year surge, and much of the recovery Essentra saw at the tail end of 2014, is due to the company’s acquisition of Clondalkin SPD. It completed this takeover on February 2nd for $455 million, and it opens Essentra up to the very lucrative pharmaceutical and beauty specialist packaging market in the USA. This purchase includes 24 new facilities, 9 of which are in North America, alongside 2400 new employees. This news has been met with a rapturous reaction from investors as 2015 has continued, helping Essentra recover nearly all its 2014 losses. Any further clarification on its intentions with Clondalkin are likely to be of keen interest to investors come the announcement tomorrow.
Essentra are looking to surpass $1 billion in sales in 2015, and have recently seen an average year-on-year revenue growth of around 9% year-on-year. Given the positive reception of the Clondalkin takeover, and these strong revenue figures, Essentra has received an average rating of ‘buy’ with a target price of £9.10, only a few pence away from its peak price in 2014.
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