Business
UBS remains optimistic: Michelin still a buy despite profit warning
Following Michelin's recent profit warning, analysts are responding calmly, led by UBS, which even sees a new buying opportunity in the tire manufacturer's weakness.
The Swiss major bank UBS has confirmed its assessment for Michelin – still "Buy" with a price target of 37 euros. Although the recent profit warning from the French tire manufacturer did not come as a surprise, the extent of the forecast cut was greater than expected according to analyst David Lesne.
UBS expects market estimates for operating profit in the current fiscal year to decrease by around 15 percent. Nevertheless, the investment story remains intact: improvements in the product mix and a solid balance sheet speak for the company's long-term strength.
Despite lower profitability, cash flow generation continues to run steadily – a positive signal for investors who rely on dividends. According to Lesne, Michelin is likely to maintain an attractive distribution policy in the future.
