On Tuesday, Kepler Cheuvreux analysts downgraded Traton SE (ETR:8TRA:GR) (OTC: TRATF) stock from Hold to Reduce, while slightly raising the price target to EUR31.00 from EUR29.00. The firm’s analysts cited a weaker than expected outlook for the fiscal year 2025 and anticipated delays in market recovery, particularly in the United States, as primary reasons for the downgrade. Despite Traton delivering a positive surprise with its 2024 key financials, concerns about the pace and magnitude of the expected earnings momentum for 2025 led to the adjustment in rating.
Kepler Cheuvreux pointed to several company-specific issues that are likely to affect Traton’s performance. These factors are expected to temper the earnings growth that investors had hoped for, following a strong start to the year for Traton’s stock. The market’s initial optimism was based on the anticipation of a recovery in truck demand, which now appears to be more gradual and less pronounced than previously forecasted.
The revised price target of EUR31.00 represents only a modest increase from the previous target of EUR29.00. This slight adjustment reflects the recalibration of Kepler Cheuvreux’s model in light of the new outlook. However, the analysts believe that the current trajectory of Traton’s earnings does not present enough upside potential to maintain a Hold rating.
The downgrade comes after Traton’s stock had seen an upward trend earlier in the year, buoyed by investor expectations of a demand rebound in the truck sector. The new assessment by Kepler Cheuvreux suggests that while there may be positive developments later in the year, they are likely to be less significant than initially anticipated.
Kepler Cheuvreux’s analysis indicates that the anticipated recovery in Traton’s end markets, especially in the US, will take longer to materialize. This longer timeline for improvement, combined with specific challenges facing the company, has led to a more cautious outlook for Traton’s stock in the near term.
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