On Tuesday, Kepler Cheuvreux analysts downgraded SGL Carbon SE (SGL:GR) (OTC: SGLFF) stock from ’Buy’ to ’Hold’ and reduced the price target to EUR4.20 from EUR6.00. The decision follows the reassessment of the company’s growth prospects due to delays and challenges in its key business segments.
According to Kepler Cheuvreux, the downgrade reflects the diminished likelihood of two major growth catalysts for SGL Carbon. The anticipated acceleration of the Silicon Carbide (SiC) business and the sale of the Carbon Fiber (CF) segment are no longer immediate drivers of the company’s growth. The analysts believe that the recovery of the Electric Vehicle (EV) segment, which is crucial for these catalysts, is not expected to occur in 2025.
The restructuring process of the CF segment, which is projected to continue until 2026, adds to the challenges faced by SGL Carbon. Despite acknowledging the company’s solid margins, Kepler Cheuvreux suggests that the growth narrative for SGL Carbon has been compromised. The absence of positive catalysts in the near term led to the conclusion that there is no compelling reason to purchase the stock at this time.
The analysts also noted that, despite the current setbacks, SGL Carbon’s long-term prospects appear to be solid. They highlighted the SiC business and the Process Technology (PT) segment as areas with promising potential in the long run. Nevertheless, the short-term outlook and the lack of positive developments in the near future have prompted a more cautious stance on the stock.
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