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On Wednesday, Jefferies analysts upgraded AB Dynamics Plc (LSE:ABDP) stock from an underperform rating to hold. The analysts set a new price target of £16.20, down from the previous target of £16.60.
The upgrade follows a period during which AB Dynamics shares have struggled, influenced by challenges in the automotive industry and concerns related to the National Highway Traffic Safety Administration (NHTSA) after actions taken by Elon Musk. Despite this, the company’s recent interim results were described as positive by Jefferies.
While AB Dynamics is not directly affected by light vehicle production, it is not entirely shielded from broader automotive industry downturns. However, Jefferies noted that automotive research and development forecasts remain optimistic, and AB Dynamics has consistently outperformed R&D growth in most years since 2011, with the exception of 2020/21.
Jefferies highlighted that AB Dynamics’ valuation premium over its peer group has decreased, now standing at 7% compared to a long-term average of 27%. This adjustment reflects a more cautious market sentiment but also presents a more balanced valuation perspective for the company.
The analysts expressed confidence in AB Dynamics’ ability to maintain resilient trading, even amid industry challenges, citing the company’s strong track record in organic growth.
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