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On Friday, Jefferies analyst Rizk Maidi revised the rating for SKF AB (SKFB:SS) (OTC: OTC:SKFRY) from Underperform to Hold, while maintaining the price target at SEK190.00. Maidi’s reassessment follows a 25% decline in SKF’s share value since early March 2025, which has brought the stock closer to Jefferies’ price target, reducing the perceived downside risk. According to InvestingPro analysis, the stock, with a market capitalization of $8.45 billion, is currently trading near its 52-week low and appears undervalued based on its Fair Value assessment.
The upgrade comes with a slight alteration in Jefferies’ financial model for SKF AB, acknowledging the impact of the Swedish Krona’s strength against the US dollar. Maidi reminded investors of the earnings cut for the US market initiated in March. The report also highlighted persistent challenges, such as the continued weakness in China’s wind energy sector, further inventory reductions within SKF’s industrial distribution in China, and a challenging environment in Europe. Despite these challenges, InvestingPro data shows the company maintains strong fundamentals with a current ratio of 2.05x and moderate debt levels. Get access to 10+ additional ProTips and comprehensive analysis with an InvestingPro subscription.
Despite these headwinds, Jefferies anticipates SKF AB to report a first-quarter margin consistent with consensus expectations. The firm believes SKF is capable of balancing cost absorption effectively. However, Jefferies has adjusted its full-year earnings estimates for SKF downward by approximately 3% to account for the increased foreign exchange headwinds.
The price target is based on a valuation of 10 times the company’s all-in EBITA, which Maidi notes is consistent with historical averages. Jefferies’ updated stance on SKF AB reflects a neutral position on the stock, suggesting that the risks and rewards are now more evenly balanced following the share price correction.
In other recent news, Deutsche Bank (ETR:DBKGn) has revised its outlook for SKF AB, lowering the price target from SEK227.00 to SEK217.00 while maintaining a Hold rating. The bank predicts SKF’s first-quarter 2025 revenue at SEK24.7 billion, a 2% organic decline compared to the previous year, and an adjusted EBIT of SEK3.2 billion, which is slightly below consensus estimates. Deutsche Bank anticipates challenges for SKF due to foreign exchange rates and expects a 5% decrease in full-year 2025 revenue to SEK95.7 billion. Meanwhile, Barclays (LON:BARC) has reiterated its Overweight rating on SKF, maintaining a price target of SEK239.00. Barclays believes SKF may experience long-term profitability improvements through strategic portfolio management and the planned spin-off of its Automotive division. Barclays remains confident in SKF’s future performance despite current slow short-cycle activities, citing potential growth in the U.S. market. Both firms highlight potential tariff risks that could impact SKF’s operations, with Barclays noting ongoing efforts to regionalize the business. These developments reflect differing perspectives on SKF’s future, with Deutsche Bank adopting a cautious approach and Barclays expressing optimism.
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