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On Tuesday, Bernstein SocGen Group initiated coverage on Daimler Truck Holding (ETR:DTGGe) AG (DTG:GR) (OTC: DTRUY), assigning the stock an Underperform rating with a price target of €32.00. The firm’s analysis highlighted the challenges faced by Daimler (ETR:MBGn) Truck, particularly in comparison to competitors Volvo (OTC:VLVLY) and Traton, who benefit from Europe as their primary profit source.
Daimler Truck, with its dominant Freightliner brand, which holds approximately a 40% market share in the crucial Class 8 heavy-duty truck market in the United States, finds its most valuable asset in the American market. This brand contributes to over half of the group’s EBIT. However, Bernstein points out that Europe, and more specifically Germany, has been a problematic market for the company, with margins and pricing falling short when compared to its peers.
The company’s new CEO, along with the new CFO, has expressed a commitment to improving margins through a significant restructuring program. Bernstein acknowledges these efforts and has factored in potential improvements in Mercedes-Benz (OTC:MBGAF)’s margins into their model. Despite this, the firm maintains a bearish stance, particularly regarding Daimler Truck’s position in the U.S. market.
Bernstein’s analysis suggests that Daimler Truck is the most vulnerable to declines in volume, potential U.S. tariffs due to significant production in Mexico, and increased competition as peers actively seek to expand their market share in the U.S. The firm’s forecasts for the company’s performance in 2025 and 2026 are over 15% below the consensus.
Furthermore, Bernstein justifies Daimler Truck’s relative valuation discount by pointing to the company’s worst-in-class margins and free cash flow (FCF) conversion, indicating a less favorable outlook for the truck manufacturer’s financial health and market position.
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