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On Thursday, Citi analysts revised their price target for Trelleborg AB (LON:0NL3) (TRELB:SS) (OTC:TBABF), a leading global engineering company, to SEK350 from the previous SEK380. Despite this adjustment, the firm maintained a Neutral rating on the company’s shares. The analysts predict a satisfactory first quarter for Trelleborg, anticipating results that align with the consensus. However, they caution that the positive Q1 performance may be perceived as lagging due to potential future economic challenges.
The analysts note that while Trelleborg’s robust margins and localized operations provide a certain degree of resilience, the company’s connection to cyclical industries suggests a delayed recovery in growth. As a result, Citi has revised its earnings per share (EPS) estimates for Trelleborg for the years 2025 and 2026, reducing them by 7% and 10% respectively. This revision is largely attributed to the effects of foreign exchange, with the Swedish krona’s appreciation, and to a lesser extent, a downward adjustment in organic growth projections.
The decrease in the earnings forecast has consequently led to the lowered price target for Trelleborg’s stock. Following the company’s recent devaluation, the analysts believe that Trelleborg’s current valuation appears relatively reasonable but not exceptionally low. They suggest that the risk/reward profile for Trelleborg’s shares is relatively balanced in the context of the current economic environment.
Citi’s stance remains neutral, reflecting a cautious outlook on Trelleborg’s stock amidst the prevailing macroeconomic conditions. The firm’s analysis indicates a conservative approach to Trelleborg’s prospects, taking into account both the company’s inherent strengths and the external challenges it faces.
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