Stock on MDAX surges with price increase: Is the upward trend set to continue?
Thyssenkrupp's shares surge 14% on Monday, leading MDAX index
The shares of German industrial conglomerate Thyssenkrupp experienced a significant increase of 14% on Monday, propelling them to the forefront of MDAX index. A study published by Bank of America on the company's stock provided a possible explanation for this unsuspecting surge.
Analysts at Bank of America kept a "Buy" recommendation for Thyssenkrupp with a price target of €8.00, and praised the marine division as a hidden growth opportunity. This division is slated to go public soon, and the analysts believe it presents a potential defense opportunity.
Additionally, the positive market sentiment for defense stocks, including Rheinmetall, might have contributed to Thyssenkrupp's rise. Some experts also pointed out that a short-selling ratio of 12% on the free float could have played a part, as short sellers may have closed their positions on the stock.
Despite Monday's increase, it is unclear whether Thyssenkrupp has another 43% of price potential left. The stock is poised to surpass the highs from May 2021 at €5.46, but chart-wise, success in breaking through these highs may not guarantee a 43% increase.
Regardless, Boerse Online currently recommends Thyssenkrupp for purchase with a price target of €8.00, in line with the sentiment expressed by Bank of America.
Thyssenkrupp (WKN: 750000)
The company announced a strategic restructuring plan in October 2021, with plans to transform itself into a holding company by separating its core divisions—materials-services, automotive-technology, and decarbonization-technologies—and opening them to outside investors. This restructuring is expected to enhance competitiveness and streamline the company structure[3][5].
However, achieving a 43% increase would be challenging, as significant progress in the restructuring, successful separation of divisions, and favorable market conditions are necessary for the stock to reach these prices[3]. The success of Thyssenkrupp's restructuring plans will be critical in determining the stock's future performance, and any value unlock would require realizing valuations materially above the company's Sum-of-the-Parts (SotP)[3].
Conflict of interest note: The management and majority shareholder of the publisher Boersenmedien AG, Mr. Bernd Foertsch, has entered into direct and indirect positions in the financial instruments mentioned in the publication or related derivatives, which could benefit from the price development resulting from the publication. Investors are encouraged to conduct their own due diligence when making investment decisions.
Investors might find it intriguing to consider investing in Thyssenkrupp's stocks, given its potential for growth, as suggested by analysts at Bank of America. The marine division, which is set to go public soon, is recognized as a hidden growth opportunity by the analysts, offering a potential defense opportunity. Furthermore, the positive sentiment towards defense stocks could aid Thyssenkrupp's growing trajectory in the stock-market.
