On Tuesday, Deutsche Bank adjusted its price target for Knorr-Bremse AG (KBX:GR) shares, a leading manufacturer of braking systems, to EUR74 from EUR72, while maintaining a Hold rating on the stock. This change reflects the company's recent preliminary second-quarter results and its updated fiscal year earnings before interest and taxes (EBIT) margin guidance.
Knorr-Bremse has increased the upper end of its EBIT margin forecast by 50 basis points for the fiscal year. The revised mid-point of the guidance is now slightly over 1% higher than the market consensus.
The company's management has expressed confidence in the margin outlook for its Rail Vehicle Systems (RVS) division and the ongoing success of the efficiency measures implemented in the previous year. This optimism comes despite expectations of a weaker truck market in the latter half of the year.
The bank also anticipates that Knorr-Bremse will revise its full-year revenue guidance upwards by approximately €100 million. This adjustment would account for the recent acquisition of Alstom (EPA:ALSO)'s US signaling business. The new revenue forecast is expected to be announced in the third quarter.
The analyst's commentary underscores the significance of the efficiency program and the strategic acquisition in bolstering Knorr-Bremse's financial outlook. With these developments, the company aims to navigate the anticipated challenges in the truck market while continuing to strengthen its position within the rail and commercial vehicle sectors.
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