Hauck Aufhäuser IB Cuts Target on Knorr-Bremse to 'Sell'

Analysts at Hauck Aufhäuser IB have downgraded their recommendation on Knorr-Bremse shares to "sell" from "hold," citing concerns over the company's exposure to the weak global economy and its high debt levels.

In a note to clients, analyst Christian Obst wrote that he is "increasingly cautious on Knorr-Bremse's outlook," due to the "uncertain macroeconomic environment" and the "company's high leverage."

Obst lowered his target price on Knorr-Bremse shares to €52 from €60, which implies a potential downside of more than 20% from the current price.

Knorr-Bremse shares have fallen by more than 30% over the past year, as investors have become increasingly concerned about the company's exposure to the weak global economy and its high debt levels.

The company's debt-to-equity ratio is currently at a high of 1.5, which is above the industry average of 1.0. Knorr-Bremse has also been struggling to generate cash flow in recent quarters, which has made it difficult for the company to reduce its debt levels.

Obst wrote that he believes Knorr-Bremse's "high leverage and exposure to the cyclical commercial vehicle market" make the company "vulnerable to a downturn in the global economy." He also noted that the company's "lack of visibility on future cash flow" is a concern.

Analysts at other brokerages have also downgraded their recommendations on Knorr-Bremse shares in recent weeks. Deutsche Bank downgraded the stock to "hold" from "buy" last month, while UBS downgraded the stock to "neutral" from "buy" earlier this week.

Knorr-Bremse is a leading manufacturer of braking systems for commercial vehicles. The company's products are used in a wide range of vehicles, including trucks, buses, and trailers.