GEA Group shares up, MS upgrades on higher margins and cash return potential
** Shares in GEA Group G1AG.DE are up 2% in early Frankfurt trade after Morgan Stanley raises the German food-processing equipment maker to "overweight" from "equal-weight"
** Broker sees cost savings driving higher marginsand further cash return
** It expects the company to increase mid-term margin targets during the upcoming CMD in October
** It says consensus implies margins flatten out to 15.8% in 2026-27 but MS disagrees and sees EBITDA margins at 17% by 2027
** GEA'sleverage in 2024 is relatively low despite existing EUR 400 mln buyback programme, MS notes and models another EUR 400 mln across 2025-26
** The broker expects GEA'scash return to shareholders, including dividend, of 5% in 2025 and 2026
** Still, with some of Gea's Dairy end markets near the cyclical low point, the broker is cautious on a sharp rebound in sales in future
Reporting by Amir Orusov
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