Barclays Upgrades Tomra Systems to ‘Overweight’, Potential for Growth in Flag Charges by investing.com

Ulaganje.com – Barclays (LON 🙂 upgraded Tomra Systems ASA to an “overweight” rating on Friday, citing growth potential in the company’s business and reduced risk in its recycling and food divisions.

Shares of the Norway-based company were up 3.2% at 08:55 ET (13:55 GMT).

The brokerage increased the price for Tomra shares to NOK 190 from NOK 165, reflecting an 18% increase from the company’s share price at the time of the report.

Analysts at Barclays have identified the increasing adoption of deposit return schemes in various markets as a key growth driver for Tomra.

With new DRS legislation to be implemented in countries such as Poland, Spain, Portugal and the UK over the next few years, Tomra’s billing segment is expected to achieve high-teens annual growth rates from FY2024 to FY2029.

This momentum positions the billing business as the highest value segment within the company.

While the recycling and food divisions have faced recent headwinds, Barclays noted that earnings appear to be slowing in those segments.

Additionally, analysts pointed to Tomra Horizons, a company focused on innovation, as a source of untapped potential.

Projects such as feedstock plants and textile recycling are still in their early stages, but could become significant contributors to future earnings if successfully scaled.

Barclays also predicts strong financial performance for Tomra, projecting revenue growth of 13% CAGR and adjusted earnings per share growth of 24% from FY2024 to FY2027.

Analysts pointed to Tomro’s ability to capitalize on policy-driven sustainability trends, particularly in Europe, as a factor boosting investor confidence.

Barclays acknowledged potential risks, including high inventory valuations and its reliance on cyclical industry performance. However, they remain confident in Tomro’s growth potential, driven by increasing demand for circular economy solutions and stricter recycling regulations.