🧐 ProPicks AI October update is out now! See which stocks made the listPick Stocks with AI

Daimler Truck shares target cut by Citi amid revised EPS forecasts

EditorEmilio Ghigini
Published 08/02/2024, 04:06 PM
DTGGe
-

On Friday, Citi adjusted its price target for Daimler Truck Holding AG (DTG:GR) (OTC: DTRUY) shares, lowering it to €45.00 from €47.00, while retaining a Buy rating on the stock.

The revision follows the company's second-quarter earnings report and updated outlook, which aligned closely with expectations, including a high-single-digit earnings reduction in line with the market consensus.

The stock exhibited weakness leading up to the results announcement, closing down but less so than the earnings downgrade. Analysts highlighted the underlying strength in the company's numbers after accounting for joint venture impairments and pointed to a solid message regarding the normalization of the truck cycle during the earnings call, rather than a downturn.

For the fiscal years 2025 and 2026, earnings per share (EPS) forecasts were further decreased by 6.1% and 3.4%, respectively. The new projections now sit more than 20% below the 2025 Street EPS estimates, suggesting that the market may still hold overly optimistic views on growth and margins into 2025. This is attributed to a U-shaped cycle and price-cost normalization that Citi believes are not fully accounted for in the Street's forecasts.

However, for fiscal year 2024, Citi slightly increased EPS estimates by 2.4%, reflecting better underlying trading in the Truck Asia and Buses segments. The forecasts for Mercedes-Benz (OTC:MBGAF) (MB) and Trucks North America (TN) in fiscal year 2024 remain largely unchanged, with potential downside risks anticipated for the third-quarter MB margin.

Citi continues to view Daimler Truck as a strong self-help story, yet the firm suggests that a reset of Street expectations for 2025 is necessary before taking a more constructive stance on the long-term investment case for the company.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.