Kepler Cheuvreux raises Thyssenkrupp price target to EUR11.70 on portfolio restructuring

Kepler Cheuvreux raised its price target on Thyssenkrupp AG to EUR11.70 from EUR10.50, maintaining a Buy rating, despite cutting its FY 2024/25 operating level estimates by 12% and forecasting a modest Q3 recovery that necessitates a strong Q4 to meet company guidance. The higher price target reflects increased multiples and limited revisions for FY 2025/26, with the firm favoring Thyssenkrupp's portfolio restructuring strategy, specifically noting expected news on the Marine Systems spin-off and discussions regarding the Steel Europe joint venture.

Analysis

Kepler Cheuvreux has raised its price target for Thyssenkrupp AG to EUR11.70 from EUR10.50, reiterating a Buy rating, which signals a positive long-term outlook despite near-term operational challenges. The firm has concurrently reduced its operating level estimates for Thyssenkrupp's FY 2024/25 by 12%, positioning its forecast at the low end of the company's guidance and 5% below consensus. This downward revision is based on an anticipated modest Q3 recovery, with an expected adjusted EBIT of EUR148 million, implying that a strong Q4 performance is necessary for the company to meet its annual targets. The analyst's confidence, reflected in the higher price target, is not based on current earnings momentum but rather on increased valuation multiples and limited negative revisions for FY 2025/26. The core of this bullish thesis lies in Thyssenkrupp's ongoing portfolio restructuring, with potential near-term catalysts identified as the spin-off of its Marine Systems division and developments in the Steel Europe joint venture discussions.

Key Decisions for Investors

• Investors should weigh the near-term earnings risk, highlighted by the 12% cut in FY 2024/25 operating estimates, against the potential long-term value unlocked by the company's restructuring strategy.
• Monitor corporate announcements closely for progress on the Marine Systems spin-off and the Steel Europe joint venture, as these events are the primary catalysts underpinning the analyst's increased price target.
• Given the reliance on a strong fourth quarter to meet guidance, investors should scrutinize the upcoming Q4 results for evidence of the required performance acceleration before fully committing to the bullish thesis.