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(Sharecast News) - Analysts at Berenberg reduced their target price on AB Dynamics to 1,350p from 1,700p on Tuesday following the group's full-year results, citing a tougher outlook for growth and margins amid continued disruption across the global automotive sector.
Berenberg, which maintained its 'buy' rating on the stock, said AB Dynamics had delivered a resilient performance in difficult market conditions, with revenues falling 12% year-on-year to £91.6m and adjusted operating profits down 18% to £18.3m. However, despite the decline in earnings, AB maintained its adjusted operating margin at 20%, supported by operational improvements and early cost-saving measures.
The German bank highlighted that the year-end order book remained broadly stable at £31m, compared with £32m a year earlier, providing good visibility into the new financial year despite ongoing macroeconomic headwinds affecting automotive customers.
Berenberg noted that management plans to reinvest in commercial operations to support future growth, while maintaining a strong balance sheet and pursuing acquisition opportunities, with net cash standing at £24.5m at year-end, following the firm's acquisition of eMpulse in August.
Looking ahead, AB Dynamics expects FY27 adjusted operating profits to be broadly in line with market expectations of around £19.7m. However, Berenberg trimmed its forecasts and lowered its valuation to reflect a more cautious view on long-term growth and profitability.
Berenberg added that the stock remains attractively valued given AB's cash position, despite persistent concerns over near-term conditions in the automotive industry.
Reporting by Iain Gilbert at Sharecast.com
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