On Thursday, Citi maintained a positive outlook on Knorr-Bremse AG (KBX:GR) shares, raising its price target to EUR90 from EUR82, while reiterating a Buy rating for the stock. The adjustment comes ahead of the company's third-quarter results, which are scheduled to be reported on October 31, 2024.
The analyst from Citi updated their financial model to reflect the latest end-market data and developments. While the earnings per share (EPS) estimates for 2025 have been slightly reduced, the forecast for the Rail sector has been increased due to supportive information from the InnoTrans conference. Conversely, the Truck sector forecast was lowered in response to weaker truck data.
For the third quarter, Citi anticipates a modest earnings beat, propelled by robust Truck margins. This performance is expected to lead to a refinement of the company's financial guidance, with revenues projected between EUR 7.9 billion and EUR 8.0 billion and a profit margin forecast of 12.0% to 12.5%.
Citi's analyst underscored Knorr-Bremse's potential as an "attractive change story," driven by internal improvements and offering a defensive position in the Truck sector. The firm's re-rating within its sector and among peers has contributed to the increased price target.
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