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On Wednesday, Deutsche Bank (ETR:DBKGn) analyst Tim Rokossa increased the price target for Continental AG (ETR:CONG) (CON:GR) (OTC: OTC:CTTAY) to €75.00, up from the previous target of €70.00, while maintaining a Hold rating on the stock. The adjustment follows Continental’s disclosure of its fourth-quarter financial results for 2024, which did not meet market expectations, alongside a forecast that fell short of estimates for both its Automotive and Tires divisions.
Rokossa noted that the automotive sector’s weaker outlook might have been anticipated due to similar projections from peers in the auto parts industry. However, the tires division’s outlook was considered disappointing. Despite the softer outlook, the analyst recognized that Continental’s projections appear to be a reasonable starting point with solid underlying assumptions when compared to past forecasts.
The company’s planned spin-off is reportedly still on schedule, according to Rokossa. While the latest financial report and outlook did not reveal any new positive developments, they did suggest that Continental’s tire business has strong cash generation potential, which is currently obscured by one-time cash outflows.
In a gesture of confidence regarding the company’s balance sheet and ability to generate cash, Continental announced an increase in its dividend to €2.5 per share, with a payout ratio of approximately 40%. This move signals the company’s commitment to returning value to shareholders despite the less than stellar financial results and outlook.
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