Schaeffler down after UBS cuts on weak sector view, limited Vitesco upside

Schaeffler AG

30/10/2023 11:08

** Shares in Schaeffler  SHA_p.DE  fall 5.4% after UBS cut
the German automotive supplier to "sell" from "neutral", citing
weak sector outlook and a limited upside from tender offer for
Vitesco Technologies  VTSCn.DE  
    ** "In our view, the uncertain sector outlook and a likely
merger with Vitesco is not fully reflected in Schaeffler's share
price, with downside risk accentuated in recent weeks on soft
sector prospects," UBS says
    ** The broker sees industry-related issues such as lower
consumer demand, pricing and cost pressure, as well as
company-specific challenges materializing in the coming quarters
    ** "Key risks to management's outlook are twofold," it says,
highlighting soaring competition on electrification, lower car
production or OEM pricing pressure due to softer consumer
demand, as well as notes management's limited track record on
sizeable mergers and synergy figures appearing demanding
    ** It cuts Vitesco to "neutral" from "buy" in line with the
offer price proposed by Schaeffler, as it sees a low
profitability of a raised offer or another bidder stepping in 
    ** Schaeffler offered 91 euros ($96.22) per Vitesco share
earlier this month

($1 = 0.9457 euros)

 (Reporting by Ozan Ergenay)
 ((ozan.ergenay@thomsonreuters.com))