Daimler Truck Holding (DE:DTG) is a leading commercial vehicle manufacturer with over 40 production sites. The company continued to grow unit sales globally despite supply chain bottlenecks in 2022. Further, the momentum carried over this year, with Q1 unit sales growing steadily. Analysts predict a potential upside of about 34% for this DAX 40 stock from its current levels, thanks to its resilient performance and solid 2023 guidance.
The truck market continued to benefit from high demand across all regions, paving the way for future growth.
Continued Demand Driving Unit Sales
The recovery in the Chinese economy, falling energy prices, and easing of the global supply chain supported the development of the truck market in the first quarter of 2023.
The segment is benefitting from the high demand for heavy-duty trucks in North America, the United Kingdom, the European Union, Switzerland, and Norway.
Looking ahead, stable demand and an improving supply chain environment will drive higher unit sales and revenues. In addition, the higher net pricing and improvement in the aftersales business will support its top line.
Upbeat Outlook
The vehicle manufacturer remains upbeat and expects unit sales to be in the range of 510 to 530 thousand units, compared to about 520.3 thousand units. Daimler expects 2023 revenue to be in the range of €55 billion to €57 billion, compared to €50.95 billion in 2022.
Management expects EBIT to increase significantly over 2022, reflecting increased sales volumes, higher net pricing, and improvements in the aftersales business.
Thanks to the higher sales and EBIT, Daimler expects its free cash flow to improve compared to 2022.
Recent Ratings
On June 26, Himanshu Agarwal from Jefferies reiterated the Buy rating on the stock, projecting a growth potential of over 21% in the share price. Before this, on June 15, Nicolai Kempf of Deutsche Bank also maintained a Buy rating on the stock. The analyst expects DTG shares to rise by over 36% from current levels.
Kempf expects higher deliveries, an easing supply chain, and improved pricing to drive the truck market.
Is Daimler Truck a Good Stock to Buy?
Analysts maintain a positive outlook on Daimler Truck stock. It has received a Strong Buy consensus rating based on six Buy and one Hold recommendations. The average price prediction for a 12-month period is €44.17, which implies a 33.65% growth from the current price.
Aside from DTG, another DAX 40 share with an attractive upside is Bayer AG (DE:BAYN), a multinational healthcare and nutrition company. Analysts predict about 47% upside in shares of Bayer.
Bottom Line
Higher unit sales, improved pricing, and an easing supply chain will likely boost Daimler’s top and bottom lines in 2023. However, macro weakness could pose challenges.
