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On Thursday, Deutsche Bank (ETR:DBKGn) analyst Nicolai Kempf revised the price target for Volvo AB (VOLVB:SS) (OTC:VLVLY), setting it at SEK 330.00, a decrease from the previous SEK 360.00, while still holding a positive outlook on the company’s stock with a Buy rating. The adjustment follows Volvo’s first-quarter earnings report, which presented a mixed performance.
Volvo AB disclosed first-quarter results that did not fully meet expectations, with earnings falling short of predictions by a double-digit percentage. Additionally, the company has adjusted its forecast for the North American truck market, predicting a more significant downturn than initially anticipated. Despite these challenges, Volvo’s order book continued to outperform estimates.
The lowered earnings for the quarter were attributed primarily to a shortfall in volumes. However, Deutsche Bank anticipates a turnaround in Europe starting from the second quarter. During the earnings call, Volvo’s management emphasized that order momentum had remained strong into April, which could signal a positive shift going forward.
The forecast for the North American truck market was notably reduced, with Volvo AB no longer expecting a pre-buy phenomenon to occur within the current year. This adjustment exceeded the expectations of Deutsche Bank analysts, who had anticipated a decrease but not to the extent reported by the company.
In conclusion, Deutsche Bank maintains that the first-quarter performance may represent the lowest point in terms of profitability for Volvo AB. The bank’s analysts expect to see an improvement in the company’s financial results beginning in the next quarter, suggesting a potential recovery from the current low.
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