On Wednesday, BofA Securities revised its stance on KION Group AG (KGX:GR) (OTC: KIGRY), downgrading the stock from Buy to Neutral. The firm also reduced its price target to €38.50 from the previous €48.50. The action comes as the analyst expressed concerns about the market's overly optimistic expectations for the company's growth and profit margins.
The analyst pointed out that their adjusted earnings before interest and taxes (EBIT) estimate for 2025 is approximately 12% below the consensus. The revision reflects skepticism regarding the anticipated growth in KION's Industrial Trucks & Services (IT&S) and the margin enhancement in Supply Chain Solutions (SCS).
Year-to-date, KION's performance has lagged behind the Stoxx Europe 600 Index (SXNP), with a 25% underperformance. Currently, KION's shares are trading at around a 55% discount compared to the index. Despite acknowledging that KION's stock appears inexpensive, the analyst does not foresee any immediate event or development that could potentially revalue the stock, especially given the dim market outlook in Europe.
The downgraded rating and lowered price target reflect a cautious view on KION's near-term prospects. The analyst's comments indicate a belief that the stock's current valuation does not warrant a more optimistic rating without clear drivers for growth on the horizon.
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