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Investing.com - JPMorgan has raised its price target on Continental AG (ETR:CON) stock to €93 from €85 while maintaining an Overweight rating ahead of the company’s upcoming spin-off scheduled for September 18.
The investment bank has updated its valuation methodology to a sum-of-the-parts framework to better capture the value of Continental’s different business units, citing potential value creation opportunities through disintegration and finding strategic or financial buyers for underperforming assets.
JPMorgan sees Aumoviο’s investment case relying on returning to organic growth and enhancing margins within the 4-6% range, with a focus on R&D efficiency in Autonomous Mobility and delivering manufacturing efficiencies in the User Experience business.
The firm highlights the Tire division’s attractiveness in building further on its best-in-class margins, benefiting from structural megatrends including larger rim sizes and EV tires, with potential upside from favorable European regulation.
Despite the price target increase, JPMorgan has reduced its FY25/26 earnings estimates for Continental by 8%/2% due to US tariffs and foreign exchange headwinds.
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