On Friday, Citi adjusted its outlook on Knorr-Bremse AG (KBX:GR), reducing the price target to €88 from €90 while sustaining a Buy rating on the stock. The revision follows the company's third-quarter results for 2024, which led to a 6% decline in share value. The analyst from Citi acknowledged the missed truck orders but did not see it as a significant concern due to the already recognized cyclical pressures in the market.
The firm highlighted Knorr-Bremse's effective cost management during the economic downturn, as evidenced by the Commercial Vehicle Systems (CVS) margin surpassing expectations. This was seen as a positive indicator of the company's operational strength. Additionally, the analyst pointed to robust rail orders as a pillar for medium-term growth, noting that their projections are 5% higher than the 2025 consensus on rail vehicle systems (RVS) orders.
Although there is an acknowledgment of concerns that weakness in the truck sector could limit the potential for upward revisions to the 2025 consensus earnings, Citi believes the company's equity story remains attractive. The analyst cited self-help measures, including divestments and further cost optimization, along with continued strength in the rail division, as reasons for maintaining a positive outlook on the stock.
The forecast for Knorr-Bremse's adjusted EBIT in 2024 has been decreased by 2%, but the expectations for 2025 remain mostly unchanged. With the price target now set at €88, Citi reaffirmed its Buy rating, signaling confidence in the company's future performance despite the recent market reaction to its quarterly results.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.