The investment bank recommends investors buy shares in Norwegian warehouse automation company AutoStore, with a price target that suggests potential gains of more than 50% over the next 12 months. Founded in 1996 and launched in Norway in 2021, AutoStore provides robots and technology to automate traditional warehouses. The company has grown to control about 80% to 90% of the market, according to German investment bank Berenberg. AutoStore shares also trade in the UK and Germany. The company says using these systems means warehouses can store items four times more densely than manually operated warehouses, while retrieving products faster than manually. Increased customer efficiency and lower operating costs allow AutoStore to achieve healthy profit margins, making its stock more valuable. “AutoStore generates best-in-class (adjusted profit) margins of (approximately) 48% on average due to the scalability of its partner distribution network and the high degree of software integration offered by its products,” said shareholder Lasse Stueben. Lemberg Analyst. The investment bank’s initial price target was NOK 15 ($1.37), representing about 50% upside from current share price levels. The company reported sales of $154 million and adjusted profit of nearly $80 million in the quarter ended June. However, AutoStore management forecast that full-year revenue could fall to $600 million, down 7.2% from last year. AUTO-NO 1Y SERIES For a growing company, declining sales have caused its stock price to plummet this year. However, a weak macroeconomic environment in Europe and delays in investment decisions by major companies in automated warehouses have led to temporary pessimism across the industry, which investors should take advantage of, analysts said. “We believe that as customers regain comfort with investing in warehouse automation in a falling interest rate environment, this is an opportunity to own premium brands at a low point in sentiment before returning to growth in 2025,” added Stueben, a Berenberg analyst. He’s not alone in his bullish thinking. Despite the short-term headwinds, Citi analysts are also optimistic about the company’s long-term prospects. Wall Street bank analysts led by Martin Wilkie said that when they visited AutoStore’s customer, British e-commerce group THG plc, the actual results proved the effectiveness of AutoStore technology. “There remains a clear disconnect between the lackluster near-term outlook and the very attractive long-term outlook,” analysts said in a Sept. 18 note to clients. “Customer stickiness is high and payback periods are long, This has somewhat limited the incentive for price cuts. The investment bank expects the “risky” stock to rise 58% to NOK 16 over the next 12 months. Food and nutrition company THG plc, owner of MyProtien, said it recouped 80% of its investment in the AutoStore robot in its first year of operation, Citi analysts said. Likewise, Berenberg noted that customers typically recoup their investment within one to three years, making the technology an attractive proposition despite its high upfront cost. Analysts at Norway-based Arctic Securities are the most optimistic about the outlook, with a target price of NOK 18, indicating an upside potential of 78%. Their analysts even dismissed reports of potential competition from big tech giant Amazon. Instead, they cited media reports that Amazon may rely on AutoStore’s technology to launch a grocery service in the United States.
Berenberg and Citi say acquisition of technology company that is quietly automating warehouses | Real Time Headlines
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