The tire manufacturer’s target prices vary wildly. Inderes analyst Rauli Juva, who gives the stock a “buy” recommendation, believes that the Nokian Tires stock will offer good returns over the next few years if the forecasts come true.
Told about the disappointing results Nokia tires share analysts.
News agency Bloomberg’s The consensus recommendation for the stock, consisting of 17 analysts’ views, is “hold”.
There are clear differences in the share’s target prices. 13 of the analysts have given a target price for the stock. In the updated target prices after Nokian Tires’ results announcement, the lowest target price for the share is six euros and the highest target price is ten euros.
Inderes analyst Rauli Juva sees Nokian Tires clear room for upside in the stock.
Production at the tire manufacturer’s new Romanian plant should be in full swing in 2027-2028. The commissioning of the new factory will significantly improve the result of Nokian Tires, which, according to Juva, should also be reflected in the company’s share price.
“At its current valuation levels, the stock offers reasonable expected returns for the next few years,” says Juva.
“It’s hard to say at what speed investors will start pricing in the stock’s better earnings in the coming years. But if our forecasts or the company’s own business goals come true, the stock should offer quite a good return in the next three to four years,” he adds.
Inderes’ recommendation for the Nokian Tires share is “buy” and the target price for the share is EUR 10.00. On Thursday afternoon, the share was traded down two percent at 8.03 euros.
“Nokian Renkaat will have its US factory operating at full capacity this year. This year, its capacity will increase to four million tires per year. Even last year, the factory was not operating at full capacity. However, the biggest production driver is the factory in Romania. It produces six million tires a year, so it replaces subcontracting, improves the profitability of Nokian Tires and brings new volume to the business,” Juva describes the profit drivers for the coming years.
Stronger results at the end of the year
Nokian Renkaide’s operating result for the beginning of the year fell short of analysts’ forecasts.
The company’s turnover remained at 236.6 million euros in January–March, while by Vara Research the consensus of nine analysts expected a turnover of EUR 269.4 million from Nokian Tires. Segments total operating profit was EUR 15.1 million in loss, while analysts were expecting an adjusted operating profit of EUR 1.2 million.
Output was weighed down by disruptions in production, especially in the largest segment, i.e. passenger car tires. Managing director Jukka Moisio commented in the results release that general economic uncertainty and low consumer confidence continued to weigh on the car and tire market.
In addition, due to the Red Sea crisis and the political strikes in Finland, the company lost about three weeks of production in Passenger car tires and one week of production in Heavy Tires in February–April.
“In the results of Nokian Tires, the end of the year has traditionally been a stronger time in terms of making a profit than the beginning of the year, because the sale of winter tires is more profitable than the sale of summer tires. This will be strongly emphasized now, at least in 2023 and 2024, when due to the lack of capacity, the company’s focus is even more on the winter season,” says Juva.
“Now the strikes and the events in the Red Sea caused additional grief. They increased the logistics costs of Nokian Tires, caused a delay in deliveries and a production stop when the stocks were full. The effects were visible in the first quarter and will be visible to some extent in the second quarter as well,” says Juva.
“Too high valuation”
A Franco-German financial services company following Nokian Tires From BHF sees the possibility that Nokian Tires may still lower its guidance for the current year.
Nokian Tires advises that its net sales in comparable currencies and total segment operating profit will increase significantly this year compared to last year.
Oddo’s recommendation for the Nokian Tires share is “sell” and the target price is seven euros.
“Even though the worst seems to be over for the company, the company’s visibility is still not sufficient. Most of the business improvements are unlikely to be realized before the years 2026–2027, before the new production facilities are completed. In addition, the valuation of the stock seems too high and the premium too large compared to its peers”, analysts Michael Foundoukidis and Anthony Dick write in the review.