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Investing.com - Deutsche Bank (ETR:DBKGn) lowered its price target on Michelin (EPA:MICP) stock (EPA:ML) to €37.00 from €40.00 on Monday, while maintaining a Buy rating ahead of the company’s upcoming earnings report. According to InvestingPro data, Michelin currently trades at an attractive P/E ratio of 11.7x and maintains a "GOOD" overall financial health score.
The French tire manufacturer is scheduled to release its first-half 2025 results on July 24 after market close, followed by a conference call that evening. The company has demonstrated strong financial stability, maintaining dividend payments for 31 consecutive years with a current yield of 3.16%.
Deutsche Bank expects Michelin to report another quarter of revenue decline for Q2 2025, citing negative foreign exchange impacts and significantly lower sales volumes.
While the bank notes that price/mix factors should continue to be positive, it believes these will be insufficient to offset the overall headwinds facing the company.
Deutsche Bank anticipates Michelin will reduce its guidance for both segment operating income and free cash flow generation due to weaker-than-expected volume trends and potential adverse impacts from tariffs.
In other recent news, S&P Global Ratings has upgraded Michelin’s long-term issuer credit rating to ’A’ from ’A-’, citing the company’s strong credit metrics and robust free operating cash flow. This upgrade reflects Michelin’s expected debt-to-EBITDA ratio of about 1.0x over the next two years, supported by resilient profitability and solid cash flow generation. The firm is projected to maintain a free operating cash flow of approximately €1.6 billion to €1.8 billion, which will cover acquisition spending and shareholder distributions. Michelin’s expansion into new business areas like polymer composites and connected solutions contributed about 17% of total group sales last year. S&P Global Ratings anticipates continued moderate spending on acquisitions, mostly self-funded through free operating cash flow. The company also plans to maintain a stable dividend payout ratio of about 50%, resulting in estimated total distributions of about €1 billion annually in 2025 and 2026. Despite challenging market conditions, Michelin’s operating performance is expected to improve, with projections for its EBITDA margin to rise to 19.2% in 2025. The stable outlook suggests Michelin will maintain prudent financial policies and resilient operating performance through 2025-2026.
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