Jefferies has initiated coverage on Dometic Group AB (DOM: SS) (OTC: DTCGF), maintaining a Buy rating but reducing the price target to SEK71 from SEK80.
The investment firm anticipates that the current market headwinds the company is facing will begin to subside by 2025, leading to a robust recovery in its Service & Aftermarket division.
The recovery is expected to be supported by positive indications from retailers and contribute to a margin expansion of over 200 basis points.
The analysis suggests that the market consensus underestimates the potential for growth in Dometic's cyclical OEM segments.
Jefferies also points out that a strategic shift in Dometic's portfolio towards products with lower price points is likely to facilitate the company in achieving a mid-term growth rate of more than 10%. This shift is seen as a key driver for the company's future performance.
Furthermore, the firm has adjusted its expectations in light of a challenging third quarter, which is now anticipated. Despite this, Jefferies holds a positive outlook on the stock, retaining its Buy rating. The report indicates that the market has already adjusted its expectations for what is predicted to be a difficult period in the third quarter.
The coverage transition to analyst Martha Ford (NYSE:F) comes with a revised outlook that reflects both the challenges and opportunities that lie ahead for Dometic.
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