SKF jumped as much as 3.6 percent, the steepest advance since April 23. The stock rose 3.2 percent to 156.35 kronor at 10:51 a.m. local time, giving SKF a market value of 71.2 billion kronor ($10.6 billion). Trading volume was at 49 percent of the daily average in the past three months.
DNB raised its recommendation on SKF to buy from hold and lifted its share-price estimate to 175 kronor from 160 kronor, according to a note to clients. SKF said on Jan. 14 it plans to cut 3 billion kronor in costs by the end of 2015 as it moves production to eastern Europe, Asia and Latin America from western European countries. In the first quarter, SKF’s earnings per share fell 38 percent to 1.74 kronor as sales in Europe and North America slumped.
“We believe SKF’s 2013-2015 EPS growth is set to outperform the sector as SKF’s end-markets stabilize,” Lars Brorson, an analyst at DNB in London, said in today’s note. SKF will also benefit as “the headwind from destocking eases and manufacturing levels normalize; SKF’s higher-margin aftermarket recovers; and the company accelerates its restructuring measures,” he said.
Of the 30 analysts who cover SKF, nine now advise clients to buy the shares while 13 have hold ratings and eight recommend customers sell the shares, according to data compiled by Bloomberg.
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