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Daimler Still Feeling Headwinds
Daimler AG (DAI - Analyst Report) is benefiting from aggressive efficiency initiatives, cost reduction efforts and new model launches. The company is likely to benefit from its focus on the emerging markets including Russia, China and India. Strong earnings performance gives a positive view on the stock.
However, the company is facing many challenges including exchange rate fluctuations, weak auto pricing, rising raw material costs, compliance with CO2 emission reductions, as well as a slowing U.S. economy. Hence, we rate it a Hold with a six-month target price of $85.00, which is based on a P/E multiple of around 9.6x our 2008 earnings estimate.
Currently, Daimler AG shares are trading at a P/E multiple of 8.8x our 2008 earnings estimate of $8.86, which is above the industry median of 9.6x. The efficiency improvement measures encourage us. Moreover, Standard & Poor's Ratings Services raised Daimler AG's long-term corporate credit ratings to 'A-' from 'BBB+' and assigned it a positive outlook.
Daimler AG reported first quarter 2008 results. In the first quarter, earnings per share were at $2.00, as compared to $2.95 in the prior-year quarter. Decrease in earnings was primarily driven by subdued performance from its truck division. Revenue increased slightly to $36.7 billion from $36.5 billion from the same period last year. Total units sold in the quarter increased 9% to 503,800.
Read the full analyst report on DAI.
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| Market Summary | Feb 10, 2010 07:28 am ET |
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