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Investing.com - JPMorgan has initiated coverage on ABB India (ABB:IN) with an Overweight rating and a price target of INR5,639.00, citing valuation bottoming after a significant correction.
The stock has fallen approximately 40% from its peak in June 2024, while India’s Nifty Fifty index gained about 6% during the same period. This correction has brought ABB India’s forward price-to-earnings multiple down from around 100x to 60x, according to Bloomberg consensus.
Growth has moderated for the industrial equipment manufacturer, with order intake growing 7% year-over-year in 2024 compared to a 15.3% compound annual growth rate over the 2019-2024 period. JPMorgan expects near-term growth momentum to remain range-bound following the strong post-COVID performance that saw order intake growth of 29%, 31%, and 23% in 2021, 2022, and 2023 respectively.
The investment bank forecasts growth will likely pick up to more normal levels in the medium term, projecting order intake growth of 3%, 12%, and 13% for 2025, 2026, and 2027 respectively. However, margins that expanded sharply over recent years are expected to normalize to 16.2% by 2027 compared to 18.9% in 2024.
JPMorgan’s price target of INR5,639 represents a multiple of 60 times March 2027 estimated earnings per share, reflecting approximately a 20% discount to the price-to-earnings multiple observed since April 2021.
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