In a report released today, Lisa Jiang from Morgan Stanley maintained a Sell rating on DMG MORI CO (MRSKF – Research Report), with a price target of Yen2,200.00.
Lisa Jiang’s rating is based on the observation that despite the recent surge in DMG MORI’s share price, driven by market expectations of increased defense spending in Germany, the actual impact on the company’s earnings is likely to be minimal. The company’s orders from Germany, which constitute a significant portion of its sales, include a small percentage related to aerospace and defense. Even if German defense spending were to double, the increase in defense-related orders would only marginally affect the company’s total orders.
Jiang suggests that while market sentiment has improved, the potential earnings contribution from increased defense-related orders is limited. This indicates that the recent share price increase may not be sustainable in the long term, leading her to recommend a Sell rating. The analysis highlights that investors should be cautious and consider the limited impact on earnings when evaluating the company’s stock performance.