By Scott Kanowsky
Investing.com -- Shares in ThyssenKrupp AG (ETR:TKAG) fell on Wednesday after analysts at JPMorgan gave the German steelmaking giant an "underweight" rating.
In a note, the analysts argued that its dealings with the automotive sector leave the company susceptible to a recent spike in European gas prices and supply chain constraints.
"ThyssenKrupp has the highest exposure to automotive (~40% at group level) which we believe presents a near-term risk to shipment volumes and/or prices," they said.
The investment bank added that it does not expect ThyssenKrupp to generate positive free cash flow until its fiscal year ending in September 2024.
Meanwhile, the analysts reiterated a previous warning they issued about the broader European steel industry, saying it expects carbon steel profitability over the next three to four quarters to dip to lows last seen in 2020 during the height of the pandemic.
"The narrative is similar across European carbon steel peers: lower prices [and] higher costs are eroding margins, whilst shipments will remain tepid on weak end-demand (auto, construction)," the JPMorgan analysts said.