Investing.com — Volvo (ST:) stock rose on Friday after UBS analysts upgraded the stock from “sell” to “neutral.”
As of 7:34 a.m. (1134 GMT), Volvo was trading 1.9% higher at SEK 274.40.
The rating revision reflects UBS’s assessment that Volvo’s current share price more accurately represents the company’s risk and reward prospects, taking into account mixed market signals and the expected improvement in performance in 2025. I am doing it.
Analysts at UBS said that while heavy-duty truck markets in Europe and North America remain challenging, the company’s fundamentals and market positioning have been recalibrated to the current economic situation, and short-term challenges and long-term He pointed out that it is necessary to balance both recovery and recovery.
Analysts at UBS said, “The 2025 truck forecast provided by Volvo & Packer (NASDAQ:) is relatively reassuring after the initial caution the industry faced about how deep the economic downturn would be. I think it gave me a great feeling.”
The expected decline in the truck market across Europe and North America remains a concern, but data suggests it may not be as prolonged or severe as previously feared.
UBS’s assessment suggests that fundamental conditions in Volvo’s core markets will gradually improve by the second half of 2025, with sales likely to increase in North America due to a “pre-buy” effect.
The term refers to an expected increase in truck orders ahead of upcoming EPA regulations, which will stimulate demand in the second half of 2025 as companies look to expand their fleets before the regulations go into effect. It is predicted that
Volvo’s European truck market is expected to stabilize by mid-2025, with a potential downside from continued economic downturn in countries such as Germany, offset by relatively strong demand in regions such as the UK. It is said that
The company adjusts production levels to meet demand, limits excess inventory, and reduces financial stress even as order volumes fluctuate.
This inventory discipline, combined with a strong backlog of Mack vocational trucks in North America, positions Volvo to be resilient despite periodic downturns in the highway sector of the trucking market.
UBS further noted that Volvo’s competitive pricing has remained stable, which has helped it maintain profitability despite continuing broad market pressures.
Unlike its competitors, which may lower prices to gain market share, Volvo has chosen to maintain stable prices in a low-growth environment, and UBS has thereby avoided a race to the bottom of margins. I think it can be prevented.
The UBS report also raised Volvo’s price target from SEK 263 to SEK 274 and valued the company at a 7.3x EV/EBIT multiple for the next 12 months, close to its historical average but at a slight discount. And so.
At this revised valuation, Volvo will command a 6% premium over its truck manufacturers, compared to its usual 8% premium.
UBS analysts said the adjusted target reflects Volvo’s alignment with current sector challenges and growth potential through the second half of 2025, although this suggests some caution remains. He pointed out that he was aware of it.
UBS provides insight into upcoming Volvo stock performance, including expected North American order intake in late October and additional strategic insights likely to be discussed at Volvo’s Capital Markets Day on November 14th. Warned about factors that could cause
These events are expected to shed further light on Volvo’s ongoing correction and market share growth forecast for next year.
UBS also said that while the upgrade does not signal a definitive buy, Volvo’s risk-reward profile becomes more favorable, particularly as broader macroeconomic indicators show early signs of improvement. , emphasized that it reflects a realignment in the truck market.
