Upgrading their rating to “buy”, Jefferies analysts said: “Siemen’s recent spin-off of Energy gives confidence that Conti’s share price will benefit from its planned spin-off of Vitesco as the combined market cap of Siemens and Energy was up 7 per cent on the day of transaction (DAX +3%)” The implication, they explained, was that there was a discount in Siemens’ sum-of-the-parts valuation. That being the case, given Conti’s “more attractive transaction structure”, the analysts predicted that Conti’s “re-rating should be more pronounced.”
Following comparably strong second-quarter 2020 results, some financial analysts have confirmed their “buy” rating for Continental AG shares. The reason? Ongoing cost-cutting plans as well as “deep restructuring measures”. Writing in an investor’s note published on 7 August, Jefferies equity research suggested Conti’s planned spin-off of its Vitesco powertrain operation plays a key role in this strategy:
On 1 May Continental AG said it will delay spin-off of its powertrain business Vitesco Technologies. Rather than executing that plan in July, as had been planned, the automotive supplier said it will pursue the listing of its powertrain subsidiary business when market conditions improve.