Liberum started covering Accrol Group Holdings PLC (LON:ACRL) with a ‘buy’ recommendation and 75p target price.
Analysts said that the turnaround is near complete while most of the financial benefits are yet to show up.
The toiler and kitchen roll producer is increasing capacity to meet demand, focusing on efficiency and increasing its client base.
“We see market share gains from brands, a shift towards higher product quality and service levels delivering wins in the grocers and a rigorous approach to efficiency should deliver improving margins,” the broker commented.
Liberum estimates the soft tissue manufacturer, one of its clients, has 12% share in a £1.8bn market.
“Accrol also has a huge opportunity to win more business with the major grocers (around 16% of Accrol sales) as the multiples seek to simplify their ranges while at the same time improve margins as they increasingly compete against the discounters.”
The discounters’ channel accounts for 68% of the company’s sales.
Shares in Accrol shot up 10% to 39p on Friday at noon.