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Kepler Cheuvreux downgraded ABB Ltd (SIX:ABBN) (NYSE:ABB (ST:ABB)) from buy to hold on Tuesday, setting a price target of CHF50.00 as the Swiss engineering firm’s valuation reached premium levels. This aligns with InvestingPro analysis, which indicates the stock is currently overvalued after surging nearly 50% year-to-date.
The research firm noted that ABB’s valuation metrics currently stand at a 20-40% premium compared to pre-Covid levels, with a price-to-book ratio of 3.93x, while the company’s profit and cash growth are decelerating, suggesting the stock is "well priced" at current levels. InvestingPro subscribers can access over 30 additional valuation metrics and expert insights to make informed investment decisions.
In its analysis, Kepler Cheuvreux provided a detailed breakdown of ABB’s business performance since 2019, highlighting the development of the group’s strategy, cash flow, and balance sheet strength over this period.
The firm updated its 2025-27 financial forecasts for ABB, lifting operating EBITA estimates by 1-3% and raising profit projections for the Process Automation division while reducing expectations for the Motion segment.
Kepler Cheuvreux also pointed out that ABB’s strengthening balance sheet provides the company with capacity for more than $5 billion in potential merger and acquisition spending, which remains a key focus area for the engineering giant.
In other recent news, ABB has experienced a downgrade in its stock rating from CFRA analysts, moving from a Buy to a Hold status. This change comes alongside a reduction in the price target from CHF58.00 to CHF45.00. CFRA’s revised outlook reflects concerns about potential economic headwinds, including global trade tensions that might impact ABB’s business. Despite these challenges, ABB maintains a higher return on invested capital compared to its peers. The analysts at CFRA have also adjusted their earnings projections for ABB, lowering the 2025 earnings per share (EPS) estimate from $2.40 to $2.28. However, the 2026 EPS forecast remains unchanged at $2.70, indicating a positive long-term outlook. CFRA highlights that while current issues may affect ABB’s short-term performance, the company is poised to benefit from future industry trends such as automation and electrification. These developments suggest a cautious yet optimistic view of ABB’s ability to navigate near-term obstacles while capitalizing on long-term growth opportunities.
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