den 18 maj 2016

Important legal information

The Swedish car producer is globally known for his safe cars. The Volvo Group is producing passenger cars as well as trucks. In 2015 Volvo Trucks reported a adjusted EBIT margin of 7.4%, which is slightly above the annual average of 2004 until 2014. However, Volvo’s data are still behind Scania and Paccar, Volvo’s biggest competitors. A new management could bring some new movement into this pool of competitors.

In more detail Volvo implemented the former management of Scania, so Volvo Trucks could benefit of their experiences. According to Handelsbanken’s latest expectations the new management team will focus on reducing Cost of Goods Sold (COGS), increasing productivity, reducing complexity of the model program and utilizing the Research and Development section. Furthermore the CEO decided to separate the Truck business and aims to reach a double digit EBIT. This process resembles the approach at Scania. Scania’s former management trusts a proven strategy and wants to improve Volvo’s data through the same procedure.

Handelsbanken’s analysts are calculating with a positive performance of Volvo’s shares. According to the EBIT of 10.8% in 2015 the analysts estimate a fair value of SEK 139 per share, which means 49% upside from the current value. However, Handelsbanken is critical of Volvo’s latest estimates and indicate a 12-month target of SEK 122. The further development has to be deferred.

Bloomberg consensus is optimistic and set the 12-month target price to SEK 106,00. Currently, 14 analysts set Volvo on BUY, 7 on HOLD and 5 on SELL recommendation, which correspond to an aggregated BUY rating.



2022-12-09 14:10:23