27 September 2013 15:43 [Source: ICIS news]
LONDON (ICIS)--Erste Group Bank has cut its rating on the stock of Austrian cellulosic fibres firm Lenzing to 'Accumulate' from 'Buy', but noted the company's growth prospects remained better than those of its peers, the bank said on Friday.
The downgrade came after the bank took into account the probable impact on net sales revenues of Lenzing's April sale of 85% of subsidiary Lenzing Plastics to Invest AG investment company, a unit of Raiffeisen Banking Group Upper Austria.
The divestment of the stake was the primary factor in Austria-based Erste lowering its 2013 net sales forecast for Lenzing to €1.94bn ($2.62bn) from €2.12bn, the bank said.
However, concluding that Lenzing has superior prospects for “growth in a challenging price environment”, Erste analyst Franz Hoerl noted that the company's average viscose fibre sales prices were following market price declines “but still maintain a premium due primarily to specialty fibres Tencel and Modal”.
“On the demand side, viscose is now more competitively priced compared to other fibres, which should help volumes to grow into capacities over time,” he added.
Lenzing Plastics, a producer of thermoplastic films and tapes, polytetrafluoroethylene (PTFE) and acrylic fibres, is continuing to make use of the infrastructure services of Lenzing.
($1 = €0.74)
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