Vontobel sees rising cyclical challenges, no near-term triggers for OC Oerlikon
08/12/2022 08:45
** Vontobel cuts OC Oerlikon OERL.S to "hold" from "buy"
as it sees "growing cyclical headwinds and lack of near-term
triggers" for the Swiss industrial group
** The broker says that due to temporarily lower end-demand
clients delay investments and push out orders to safeguard
capital expenditures, which will hit Oerlikon later in 2023
** Declining pre-payments will weigh on cash flows, it adds
** As industrial activity and PMIs weaken, Vontobel expects
lower demand from general industries and tooling for Oerlikon's
surface solutions business, while recovering aviation and
automotive will provide some support
** "Although past and future cost actions will support
higher profitability than in previous troughs, we anticipate
some margin pressure through the cycle," it adds
** It cuts its earnings estimates by another 10%/7% for
FY23/24 after lowering them 24%/14% in November, which puts its
FY23 EPS expectations 27% below consensus
** The stock drops 3.5%
(Reporting by Linda Pasquini)
((Linda.pasquini@thomsonreuters.com))