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Investing.com - Nomura/Instinet initiated coverage on Hyundai (OTC:HYMTF) Rotem Co Ltd (KS:064350) with a Buy rating and a price target of KRW260,000, representing approximately 30% upside potential from current levels.
The investment firm’s analysis suggests Hyundai Rotem is undervalued compared to its overseas order pipeline, with the stock trading at a 2025 forward price-to-earnings ratio of 22.8x, which is 45.1% below Korean peers and 33.0% below global competitors.
Nomura derived its target price by applying a 30.8x multiple to the company’s 12-month-forward earnings per share estimate of KRW8,289, which represents a 10% discount to the 2025 average global peer P/E of 34.2x to account for dilution from Rail Solution and Eco Plant businesses.
The firm highlighted that based on market capitalization to 2025 forecast backlog ratio, Hyundai Rotem appears 28.4% undervalued compared to Hanwha Aerospace and 63.1% undervalued versus Rheinmetall (ETR:RHMG), according to Bloomberg consensus data.
Nomura identified potential downside risks including delays or cancellations of expected Middle East orders that could lead to operating profit declines in 2027, as well as the possibility that new contract values might be smaller than forecasted.
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