TKA: Future Workforce Cuts And Mixed Rating Shifts Will Shape Risk Profile

Analysts have nudged their price target on thyssenkrupp slightly lower, from about EUR 10.20 to roughly EUR 10.09. This reflects modestly higher perceived risk and only incremental adjustments to growth and margin expectations, despite recent target increases and rating upgrades from the Street.

Analyst Commentary

Recent Street actions point to a more balanced, but still cautious, stance on thyssenkrupp. Price target revisions and rating changes suggest that, while downside risk has moderated, confidence in a sustained re-rating remains limited.

Bullish Takeaways

• Bullish analysts highlight that recent price target hikes, including from major houses such as JPMorgan, signal improving conviction that restructuring efforts and portfolio measures are beginning to translate into more resilient earnings.
• The move from a negative to a neutral or hold stance by some previously bearish voices is seen as evidence that valuation now better reflects cyclical and execution risks, limiting further downside in the near term.
• Higher target ranges versus prior levels imply that, if management executes on cost savings and asset optimization plans, there is scope for upside to cash flow and margins relative to current market expectations.
• The presence of double digit price targets in some models suggests room for multiple expansion if the company can demonstrate more stable order intake and progress on strategic refocusing of the portfolio.

Bearish Takeaways

• Bearish analysts remain cautious that the recent price target increases are modest in absolute terms, indicating lingering skepticism about the company’s ability to deliver consistent, cycle independent returns.
• The prevalence of hold and neutral ratings underscores concerns that, despite some operational progress, visibility on sustainable margin improvement and de risked execution remains limited.
• There is ongoing worry that macro headwinds, particularly in industrial demand and steel markets, could cap volume and pricing power, constraining top line growth even under improved internal efficiency.
• Some models still embed a material discount to peers, reflecting uncertainty around the timing and success of portfolio actions and whether restructuring benefits will be sufficient to justify a higher long term valuation multiple.

What's in the News

• thyssenkrupp Steel Europe plans to reduce its workforce from about 27,000 to roughly 16,000 employees by 2030 as part of a major cost cutting program. The initiative is aimed at restoring long term profitability amid weak demand and rising competition from Asia (company announcement).

Valuation Changes

• Fair Value Estimate has edged down slightly, from about €10.20 to roughly €10.09 per share, indicating a marginally lower fundamental valuation.
• Discount Rate has risen moderately, from around 5.59 percent to about 6.24 percent, reflecting a higher perceived risk profile in the updated model.
• Revenue Growth assumption has been trimmed marginally, from approximately 2.79 percent to about 2.78 percent, signaling essentially unchanged top line expectations.
• Net Profit Margin forecast has eased slightly, from roughly 2.57 percent to about 2.55 percent, pointing to only a minor reduction in expected profitability.
• Future P/E multiple has increased modestly, from about 8.0x to roughly 8.1x, suggesting a small uplift in the valuation placed on forward earnings.