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Investing.com - Jefferies initiated coverage on German auto supplier Aumovio SE (ETR:AMV0) with an Underperform rating and a price target of EUR30.60, implying a 12% downside potential.
The research firm cited concerns about Aumovio’s margins, which currently sit below European peers, and questioned the company’s ability to improve them while simultaneously reducing R&D expenses and achieving above-market growth targets.
Jefferies highlighted competitive threats from technology players in the software-defined vehicle (SDV) space and broader Chinese competition as key challenges for the Continental spin-off.
The investment bank expressed skepticism about Aumovio’s ambitious plan to outperform global light vehicle production with a 4-5% five-year CAGR compared to the global market’s 1%, while also delivering material margin improvements.
Jefferies noted that Aumovio expects its AM division to drive the bulk of its growth (approximately 13% five-year CAGR), despite R&D accounting for about 26% of sales in this division, raising questions about the feasibility of reducing R&D spending while remaining competitive.
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