Investing.com -- Technogym shares rose 4% on Thursday after Citi upgraded the Italian fitness equipment maker to "buy" from "neutral", saying third-quarter organic growth of about 3% excluding currency effects marked the low point and that growth should gradually accelerate.
Citi raised its price target to €17 from €15. Technogym shares closed at €14.48 on Nov. 4.
The new target implies an expected share price return of 17.4% and a total return of 20.2%, including an expected dividend yield of 2.8%.
Citi said the shares rose after the third-quarter results, which were in line with expectations.
The broker attributed the quarter's performance to temporary factors, including delayed dispatch of large orders linked to the Sandstone launch and delivery disruptions in the Middle East, India and Africa and Asia-Pacific.
It expects growth to pick up gradually, with the reversal of several one-off factors supporting the fourth quarter.
Market consensus assumes revenue growth excluding currency effects of 6.0% in 2027 and 7.2% in 2028, well below Technogym's 2023-25 average of 13.8%, Citi said, adding that it sees scope for earnings estimate upgrades.
Citi's cost tracker shows input costs rose about 3.7% year-on-year in each of the past three months, or about 6.5% including freight, although freight rates have levelled off.
The broker expects price increases to start offsetting cost inflation in the second half of 2026, limiting the decline in adjusted operating margin to around first-half 2026 levels, down 47 basis points year-on-year, before a recovery in 2027.
Citi said the share price decline earlier this year reflected concerns about Middle East-related disruption to freight costs and deliveries, as well as higher spending, including factory expansion in Slovakia and Italy and increased commercial investment in the United States.
Citi's tracker of seven listed gym operators implies industry capital spending growth of 6% in 2025, 16% in 2026, 5% in 2027 and 3% in 2028.
The broker said Technogym could outgrow the market through market share gains, new products and sales to hotels, healthcare providers and consumers.
It estimates the company holds about 3% of the U.S. gym equipment market, compared with about 7% globally.
Citi cut its 2026-28 adjusted operating profit forecasts by 0.1%, 1.4% and 1.9%, respectively, reflecting slightly higher operating spending to support growth.
However, a lower cost-of-capital assumption of 7.7%, from 8.0% previously, more than offsets the forecast reductions and lifts its price target.
Its 2026-28 earnings per share estimates are 2.1% to 3.5% above consensus. Citi's bull-case price is €20 and its bear-case price is €12.5
Original Article
Technogym shares rise 4% as Citi sees temporary sales setbacks fading
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