Nomura Securities Downgrades ABB Ltd (ABB) to Reduce (Earlier)

Nomura Securities downgraded ABB Ltd (NYSE: ABB) from Neutral to Reduce and cut its price target to CHF 16 from CHF 18.

Analyst Alexander Virg commented, "The outcome of the strategic review of Power Grids is likely to disappoint and later-cycle oil & gas exposure likely to weaken through 2016. Base order business trends indicate revenue declines further and pricing headwinds in the base business are likely to weigh on margins. With consensus expectations too optimistic and relative valuations (vs Siemens and Schneider in particular) reaching five-year highs, we downgrade ABB to Reduce from Neutral and cut our target price to CHF 16 from CHF 18. ABB offers EPS growth in line with the SXNP during 2016E-18E (14%) and lower than Siemens/ Schneider (18%, both Buy), yet is trading close to five-year highs on EV/EBIT relative to both stocks and the EV/sales of 1.3x more than reflects the margin potential. Our reverse DCF analysis implies c3% revenue growth at the 10-year average EBITA margin (11.5%) vs Schneider/ Siemens at 0.2%/-1.2%, respectively."

For an analyst ratings summary and ratings history on ABB Ltd click here. For more ratings news on ABB Ltd click here.

Shares of ABB Ltd closed at $18.51 yesterday.

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