NEW YORK (dpa-AFX) - The US bank JPMorgan sees margin potential at Continental in 2024 through optimization measures. The focus is on three categories: Research and development, the consistent implementation of the corporate strategy and measures to reduce fixed costs, analyst Jose Asumendi wrote in a study published on Monday. The expert therefore raised the shares of the automotive supplier and tire manufacturer from "Neutral" to "Overweight" and increased the price target from 76 to 100 euros. The shares currently cost 73.54 euros.

Looking at individual divisions, Asumendi believes that the Contitech division should benefit from a shift in the product mix and increase the share of sales generated by industrial applications, which should lead to an improvement from mid-single-digit to double-digit operating profit margins (EBIT margin) over the next three years. The division bundles rubber and plastic products outside the tire industry. The tire division will probably continue to work on efficiency measures in order to at least maintain the current level of profitability.

Furthermore, Asumendi still does not consider Continental shares to be expensive. Overall, the expert emphasized that the December 2023 Capital Markets Day showed the company a clear path to not only improve its overall earnings, but also to divest, spin-off or restructure certain business units within the automotive division.

With an "Overweight" rating, JPMorgan expects the shares to outperform the sector over the next six to twelve months./la/ag/mis

Analyzing institute JPMorgan.

Publication of the original study: 14.01.2024 / 22:54 / GMT

First dissemination of the original study: 15.01.2024 / 00:15 / GMT