Nokian Tyres (Sell, TP: EUR26.00) - Price study indicates downside risk
Our proprietary study shows that Nokian Tyres’ selling prices have fallen sharply in February (double-digits in the Nordics and c4% in Russia), indicating that consensus 2020e EBIT at -10% YOY is too optimistic. We are 7% below consensus 2020e EBIT, and have downgraded to SELL (HOLD) as we believe the recent rally – driven by unconfirmed media speculation of an activist investor, and private equity and M&A interest in the company – has left the shares overvalued at a 2021e P/E of 16x. We reiterate our EUR26 target price.Nokian Tyres is a tyre manufacturer. Co. mainly sells its products in the aftermarket. Co. and its subsidiaries include the Vianor tyre retail chain, which provides wholesale and retail services in Co.'s primary markets. The core business units in Co. and its subsidiaries are Passenger Car Tyres, which develops, manufactures, and markets summer and winter tyres for passenger cars and delivery trucks as well as SUVs; Heavy Tyres, which focuses on special tyres; as well as Vianor, which provides tyres for all vehicles: passenger cars, vans, trucks, and heavy machinery. In addition to Nokian-branded tyres, the Vianor tyre retail chain sells other tyre brands and a variety of motoring products.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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