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Investing.com -- Thule Group’s (ST:THULE) shares rose more than 8% on Monday after analysts at Jefferies upgraded the stock to a "buy" from "hold" rating.
The analysts pointed to the company’s strong performance in Europe and its attractive valuation, particularly following a drop in its stock price.
The brokerage said the recent de-rating offers an appealing entry point, especially as Thule takes steps to strengthen its position in the U.S. market.
Jefferies noted that while growing concerns about a potential recession in the U.S. have led to cautious behavior from retailers and consumers, Thule has responded with a targeted reorganization aimed at improving profitability.
The company is shifting its focus to high-return segments and has established a dedicated sales organization in North America.
It has also decided to exit its North American car seat business and plans to raise prices by an average of 10% beginning June 1 to offset tariff-related and broader cost pressures.
Despite uncertainty, the analysts estimate that less than half of U.S. sales are directly affected by tariffs, thanks to the company’s domestic manufacturing footprint.
The brokerage revised its earnings estimates downward, cutting projected earnings per share for 2025 through 2027 by 12% to 20% to reflect softer demand in the U.S.
Still, Jefferies said the company’s direct-to-consumer sales platform is showing resilience and outperforming the retail channel globally, suggesting that current weakness is more likely due to cautious retailer inventory management than a drop in consumer interest.
Jefferies pointed to signs of strength elsewhere in the business, including stable European demand and potential margin benefits from the recent acquisition of QuadLock.
Analysts also expect cost pressures tied to product launches to ease in the second half of the year, potentially supporting earnings recovery.
Thule’s position in the premium segment and strong brand presence remain competitive advantages, the analysts said.
Following the stock’s 30% year-to-date decline, Thule is now trading at a forward EV/EBIT multiple of 14 times for 2026, a 25% discount to its five-year average.
Jefferies reduced its price target to SEK 290 from a prior level but maintained that the new target still implies 25% upside.