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Volvo stock price target raised by analyst following robust Q1 earnings

EditorRachael Rajan
Published 2024/04/17, 15:04

On Wednesday, CFRA maintained a Buy rating on Volvo AB (VOLVB:SS) (OTC: OTC:VLVLY) and increased the price target to SEK333 from SEK328. The adjustment reflects a positive outlook based on the company's strong brand and ongoing efforts to find new revenue streams.

Volvo AB's first-quarter earnings per share (EPS) for 2024 were SEK6.92, showing a 9% year-over-year increase and surpassing the consensus estimate of SEK6.19.

The company's Q1 performance was bolstered by sales that remained stable year-over-year, benefiting from pricing adjustments that compensated for a decrease in volume. Notably, truck deliveries during the quarter experienced a 10% year-over-year decline, while construction equipment deliveries remained unchanged from the previous year.

CFRA has also revised its EPS forecasts for Volvo AB, raising the 2024 estimate to SEK20.42 from SEK20.14, and the 2025 projection to SEK21.63 from SEK21.33. The firm's decision to maintain a Buy rating is driven by Volvo's ability to manage cost inflation through its pricing power, its leading position in truck electrification, and a robust balance sheet.

Despite an anticipated slowdown in sales for 2024 due to high-interest rates impacting demand, CFRA expects a recovery in 2025 following a cut in interest rates. The firm's valuation of Volvo AB is based on a 16.3x price-to-earnings (P/E) multiple on the company's 2024 EPS, which is one standard deviation above the 10-year average forward P/E, indicating a premium valuation for the company's strengths.

InvestingPro Insights

As Volvo AB (OTC: VLVLY) continues to navigate through the evolving automotive landscape, real-time data from InvestingPro provides a deeper understanding of the company's financial health and market performance. With a market capitalization of $54.59 billion and a P/E ratio that has adjusted to 9.94 in the last twelve months as of Q4 2023, Volvo AB is trading at a valuation that suggests potential for growth, especially considering the PEG ratio of 0.22 indicating a low price relative to earnings growth.

InvestingPro Tips highlight that Volvo AB pays a significant dividend to shareholders, with a current yield of 5.01%, and the company's stock has experienced a strong return over the last three months, with a 23.74% price total return. Additionally, four analysts have revised their earnings upwards for the upcoming period, suggesting increased confidence in the company's financial prospects. For those looking to delve deeper into Volvo AB's potential, there are additional InvestingPro Tips available, which can be accessed with a special offer using coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.

These insights and tips are particularly relevant for investors considering Volvo's current position as a prominent player in the Machinery industry, with its strong brand and strategic initiatives to expand revenue streams as noted in CFRA's report. The company's ability to maintain stable sales and manage cost inflation, alongside its leading role in truck electrification, present a compelling case for those looking at long-term investments.

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

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