J.P. Morgan Downgrades SKF on Margin and FX Risks

J.P. Morgan Lowers SKF Rating to Underweight

J.P. Morgan has downgraded Swedish bearings manufacturer SKF to "underweight" from a "neutral" stance. The investment bank also reduced its price target for the company, signaling concerns about future profitability and strategic execution.

Situational Overview

The downgrade is primarily attributed to delays in the planned separation of SKF's automotive division. Analysts at J.P. Morgan also cited a weaker risk-reward profile for the company heading into 2026, suggesting potential headwinds for investors.

Impact on Financial Forecasts

Reflecting a more cautious outlook, J.P. Morgan cut its June 2027 price target for SKF to Skr215 from Skr245. This adjustment follows reductions to the firm's adjusted EBIT forecasts for 2026 and 2027 by 9% and 7% respectively.

Concluding Outlook

The analyst action highlights increasing pressure on SKF's margins and challenges related to its corporate restructuring. Investors will be closely watching the company's progress on its automotive unit separation and its ability to navigate forecasted financial strains.

FAQ

Q: Why did J.P. Morgan downgrade SKF stock?
A: The downgrade was due to delays in the separation of its automotive division and a weaker risk-reward outlook leading up to 2026.

Q: What is the new price target for SKF from J.P. Morgan?
A: The new price target for June 2027 is Skr215, reduced from the previous target of Skr245.

Source: Investing.com