Jan. 10 (Bloomberg) -- SKF AB, the world’s largest maker of bearings, fell to its lowest level in three weeks in Stockholm trading as Bank of America Merrill Lynch downgraded the shares to underweight from neutral.
The stock fell as much as 2.3 percent to 160.70 kronor, the lowest level since Dec. 19., and was down 1.9 percent to 161.30 kronor as of 11:50 a.m. in the Swedish capital. Trading volume was about 90 percent of the three-month daily average. SKF gained 21 percent in the second half of 2012.
“With little internal cost cutting momentum and less balance sheet firepower than closest peers, we think the share screens poorly and downgrade our rating,” the bank said in a Jan. 9 note to clients.
Any inventory rebuilding in 2013 will probably benefit SKF, yet may take some time to become obvious, Bank of America Merrill Lynch said. To get back to peak margins, SKF needs to see demand recover in the high-margin businesses while the recent run in the share has removed any valuation discount and market estimates already factor in an earnings recovery, the bank said.
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