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On Tuesday, Citi adjusted its stock price target for Epiroc AB (EPIA:SS) (OTC: EPOKY), a leading productivity partner for the mining and infrastructure industries, to SEK214.00, up from the previous SEK202.00. The firm maintains a Neutral rating on the stock.
Epiroc is expected to release its third-quarter results for 2024 on October 25. The report will likely highlight the company's order intake, which is anticipated to align with consensus estimates after accounting for recent large order announcements. Analysts will be paying close attention to the company's Equipment & Service (E&S) segment, particularly looking for signs of margin stabilization excluding foreign exchange (FX) impacts.
The upcoming financial results could show early indicators of profitability improvements due to a favorable comparison to the previous year, a better product mix, and cost savings from a reduction in the workforce. The company had previously reported that 250 employees left the E&S segment in the second quarter, which is expected to have a gradual positive impact on the profit and loss statement in the third quarter, with more significant effects in the fourth quarter.
The impact of FX, especially the quarter-end effect from balance sheet translation, is noted to be complex to calculate. However, the focus for analysts and investors will be on the organic growth of the margin. Any substantial organic improvement could result in a positive reaction from the market on the day of the earnings release, according to Citi's analysis.
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