Street Calls of the Week
Investing.com - JPMorgan has maintained its Overweight rating on Daimler Truck Holding AG (ETR:DTG) (OTC:DTRUY) while adjusting its price target to EUR50.00 from EUR56.00 following recent U.S. tariff implementations.
The investment bank has taken a more cautious approach for 2026 by incorporating 50% of the estimated gross tariff impact into its 2025/26 forecasts and removing steep market recovery assumptions. JPMorgan cited ongoing U.S. freight weakness and uncertainty around EPA 2027 regulations as reasons why previous recovery expectations based on strong pre-buy are no longer justified.
JPMorgan has reduced its 2025/26 adjusted EBIT estimates by 2% and 14% respectively, placing them 4% and 13% below Bloomberg consensus. Despite these adjustments, the firm expects Daimler Truck to generate at least EUR2-3 billion in underlying free cash flow over the next three years.
The bank believes improvement will be driven by the COST DOWN Europe initiative, which targets approximately 600 basis points of margin improvement in the region over the longer term. Prudent portfolio and balance sheet management are expected to leave approximately EUR4 billion in excess cash to support total returns beyond free cash flow.
With a EUR27 billion market capitalization, JPMorgan views the current tariff volatility as offering investors a "compelling medium-term capital appreciation opportunity" as Daimler Truck executes its Cost Down Europe Plan and builds its track record following the Mercedes-Benz Group spin-off, while maintaining 9-10% cash returns to shareholders in 2026E/27E.
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