On Thursday, Exane BNP Paribas (OTC:BNPQY) revised its stance on Knaus Tabbert AG (KTA:GR) stock, downgrading from Outperform to Neutral and reducing the price target to €38.00 from the previous €55.00. The firm's decision was influenced by several factors impacting the recreational vehicle manufacturer's outlook.
The downgrade was prompted by a reassessment of the company's earnings per share (EPS) estimates for 2024/2025, citing concerns over lower dealer demand. Dealers are currently grappling with rising inventory costs, which, coupled with the uncertainty surrounding consumer spending and preferences, has led to a more cautious view of Knaus Tabbert's future performance.
Exane BNP Paribas highlighted a likely weak second-quarter order intake for Knaus Tabbert, which is expected to be reported on August 8, 2024. This anticipated decline in orders is part of the rationale behind the downgrade. Additionally, the firm pointed to fading earnings momentum and estimates for the 2024/2025 period that fall below consensus as reasons for the revised rating.
The analyst also noted the issue of still-elevated inventories at Knaus Tabbert, which are seen as a burden on the company's free cash flow (FCF) generation. This financial strain is another contributing factor to the analyst's decision to adjust the stock's rating and price target.
In summary, Exane BNP Paribas' revised outlook for Knaus Tabbert AG reflects a confluence of challenges, including lower dealer demand, rising inventory costs, fading earnings momentum, and below-consensus estimates for the coming years, which have all played a part in the downgrade to a Neutral rating with a new price target of €38.00.
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