With a new target price of €56.2 from €62 previously, Eurobank Equities maintains its “buy” recommendation for Metlen. It’s noted that the group’s core profitability remains strong despite the recent credibility hit due to the profit warning. Indeed, Eurobank Equities’ assessment of Metlen’s medium-term earnings dynamics in its core activities remains almost unchanged. The revised valuation leads to the new target price of €56.2, leaving significant upside potential (55.6% upside compared to yesterday’s close at €36.12) relative to current levels, as a gradual restoration of investor confidence is expected.
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Metlen: The profit warning and 2025 EBITDA revision
Metlen issued a profit warning last week, reducing its EBITDA forecast for 2025 by approximately 25%, to levels of €750 million. The revision is linked to cost overruns at the M Power Projects (MPP) unit, as well as delays in completing three asset rotation transactions.
In the MPP sector, management reported unexpected cost increases and delays in selected projects, starting with the Protos project in the United Kingdom and the recognition of additional overruns during the fourth quarter and 2025 year-end closing process. The company emphasized that the problems are limited exclusively to this specific activity and do not affect the core Energy, Metallurgy, or Renewable Energy Sources sectors. The affected projects are expected to be completed with revised budgets and timelines, while control processes and project monitoring have already been strengthened on a quarterly basis, especially after the company’s listing on the London Stock Exchange.
The brokerage’s estimates
In the short-term horizon, the brokerage estimates that:
- 2025 profitability will be reassessed significantly lower, while 2026 forecasts will likely be revised downward by a single-digit percentage at EBITDA level, due to limited MPP contribution and timing shifts in renewable energy project sales.
- Investors are likely to assign minimal or zero value to MPP activity until confidence in project execution is restored.
- The episode creates a temporary credibility hit, as the market will seek evidence that cost control and project management mechanisms have stabilized.
Regarding the risk of new losses at MPP, Eurobank Equities estimates it is limited, given that the main problematic projects are already approximately 75%-80% complete. Potential additional delays are expected to have relatively limited impact on results.
Revision of estimates
The brokerage revises its forecasts for 2025 according to the company’s new guidance and reduces EBITDA estimates for 2026-2027 by approximately 7% and 3% respectively. The new forecasts no longer include MPP contribution, while adjustments have been made to the timing of renewable energy project sales and estimates for metals and energy activities.
MPP represented less than 5% of group EBITDA in previous forecasts for 2026-2027, meaning that Metlen’s investment story continues to be based primarily on core activities. In this context, market attention is expected to turn to implementing the asset rotation strategy, which could be the most reliable path for restoring confidence and achieving a re-rating of the stock.
