ION expands ETF trading capabilities with Tradeweb integration
Investing.com - Deutsche Bank upgraded SKF AB (OTC:SKFRY) from Hold to Buy and raised its price target to SEK280.00 from SEK240.00, citing value creation from the planned separation of the company’s Automotive division. The Swedish bearing manufacturer, currently trading at $24.93, has already delivered impressive returns with 37.2% year-to-date and 35.6% over the past year.
The bank sees approximately 30% upside potential from current share price levels, driven by a re-rating on about 90% of the group’s earnings base and a de-rating on 10% of the base following the spin-off. This aligns with InvestingPro analysis, which indicates SKF is currently undervalued based on its Fair Value assessment.
Deutsche Bank expects the Industrial division to trade at approximately 12 times earnings while the Automotive unit would trade at around 7 times, which aligns with their respective peer groups.
While SKF remains a short-cycle business with limited visibility, Deutsche Bank believes the potential rewards now outweigh the risks, with restructuring and separation costs being known factors.
The bank also noted that volumes have likely bottomed out and price/mix remains generally supportive, with lead indicators showing a mix of positive and neutral signals.
In other recent news, SKF reported third-quarter results, showcasing organic revenue growth of 2.0% to SEK 22.5 billion, surpassing the consensus expectations of 0.7% growth to SEK 22.3 billion. The Industrial segment led this growth with a 3.8% increase, while the Automotive segment experienced a decline of 2.3%. Both segments exceeded analyst expectations, with the Industrial segment beating by 0.7% and the Automotive by 0.6%. Additionally, BofA Securities upgraded SKF’s stock rating from Neutral to Buy, raising its price target to SEK 280.00 from SEK 240.00. This upgrade is based on anticipated sales and profit growth, as well as the planned spin-off of the automotive division in 2026. Furthermore, SKF signed an agreement to sell its precision elastomeric device operation in Elgin, Illinois, to Carco PRP Group for approximately $70 million. This divestment is part of SKF’s strategic focus on its core aerospace business areas. The Elgin operation generated annual sales of around SEK 260 million in 2024.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.