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Investing.com - Morgan Stanley downgraded Sika AG (SIX:SIKA) (OTC:SKFOF) from Overweight to Equalweight and reduced its price target to CHF193.00 from CHF248.00, representing a 22% decrease.
The downgrade follows Morgan Stanley’s assessment that Sika will likely struggle to recover revenue growth to the double-digit levels achieved before the MBCC transaction.
Morgan Stanley cited management’s decision to prioritize margin protection and structurally reset operations in China, Sika’s second-largest market, as key factors limiting growth potential.
The firm also noted decelerating or stagnant trends in other regions, including the USA, Germany, France, and Switzerland, which collectively account for approximately 50% of Sika’s revenues.
Morgan Stanley observed that Sika’s new, lowered revenue growth targets no longer distinguish the company from other Swiss-listed construction and materials businesses or global lightside peers, with a narrowing gap between Sika’s growth in EMEA and Americas compared to non-residential construction markets.
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