SKF’s Target Price Adjusted: Deutsche Bank Lowers Outlook with Cautious Optimism

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Deutsche Bank has reduced its target price for SKF AB (SKFb.ST) to SEK 194 from SEK 199, while retaining a Hold rating on the stock. This reduction follows a string of recent downward revisions, which reflect a more conservative view of the company's near-term prospects.

Key Highlights:

The new target price of SEK 194 indicates Deutsche Bank's scaled-down hopes for SKF, after previous cuts to SEK 217 and SEK 199 over the last few months.
The Hold rating suggests that the analysts view little upside at current levels, pointing to issues like weaker revenue estimates, margin squeezes, and ongoing foreign exchange headwinds.
Deutsche Bank's latest commentary points to expectations of a 5% fall in group revenue for FY2025, while group sales are forecasted at SEK 95.7 billion and adjusted EBIT is predicted at SEK 12.0 billion.
The bank observes that SKF continues to exhibit good execution and resilience in pricing, but generally muted trading conditions continue, with only marginal gains in main indicators such as the Purchasing Managers' Index (PMI).

Analysts also refer to limited cost relief and continued global trade uncertainty, and say that any substantial reversal of performance will take longer.

In spite of the conservative view, SKF has a healthy financial profile with strong liquidity, moderate debt, and a steady dividend history, which might be some comfort to investors.

Deutsche Bank's new target is a balanced perspective: recognizing SKF's strengths in operations but cautious about macroeconomic and sector-specific headwinds that might detract from performance until 2025.

Sources: Business Insider, MarketScreener, Investing.com