SGL Carbon: Is a Comeback Story in the Making With the Sale of the Carbon Fiber Division and the end of the Bottoming out? Up to 70% Upside Potential!

The SGL Carbon share (723530) could be on the verge of a comeback. The company is active in several segments. The segment with the highest revenues and earnings is Graphite Solutions, which develops and manufactures graphite-based products. These partially refined products are purchased by customers in the semiconductor, LED, battery and solar industries. For example, the products are required within the SiC value chain, as graphite heating elements and hard and soft felts are needed for heat insulation when growing crystals. Graphite anode material for energy storage is also offered. Another segment of SGL Carbon is Carbon Fibers, which focuses on textile fibers and carbon fibers for lightweight construction. Customers are the automotive and wind energy industries, where composite materials are becoming increasingly important. However, this division is now to be sold in order to increase the margin at Group level and concentrate on the much higher-growth areas such as graphite.

The current figures are not yet highlights. In 2024, EBITDA of €160-170 million (2023: €168.4 million) is expected to be achieved with sales stagnating at around €1.09 billion. If the sale of the carbon fiber division is successful, then €180-190 million would also be possible. The declared goal is to grow to €1.6 billion in revenue and €300-330 million in EBITDA by 2028. In addition to the sale of the division, this is where the fantasy lies. EPS should land around €0.41 in 2024 and could climb to €0.53 in 2025. SGL is not expensive.

Analysts are becoming more bullish and see the outlined story. HSBC raised its rating today from Hold to Buy with a target of 10 euros. This represents 45% potential. Deutsche Bank raised its target from €11.20 to €11.70, which means 70% potential. At the same time, SGL Carbon should leave the bottom formation around 7 euros so that traders can follow!

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