Sika: Initiating Coverage of Sika With a Narrow Moat Rating and CHF 230 Fair Value Estimate
We’re initiating coverage of construction chemicals producer Sika with a fair value estimate of CHF 230 and a narrow moat rating. We anticipate Sika will grow earnings per share at an annualized rate of 12% during our forecast period. We believe its attractive growth prospects, brand reputation for reliability, and runway for mergers and acquisitions justify our implied 26 times forward P/E multiple, which is consistent with its 10-year average. Shares are currently trading at a 14% premium to our fair value estimate, thus we suggest investors wait for a better entry point.