The world’s second-biggest maker of trucks is about to increase its market value by roughly a fifth, if analyst estimates are to be believed.
Volvo AB, which can hardly keep up with orders, will probably enjoy rising demand for trucks through 2019, according to Graham Phillips, an analyst at Jefferies Group LLC. He says fears that Volvo is vulnerable to swings in the economic cycle are now playing too big a role in steering the share price.
The average of analyst estimates provided to Bloomberg shows that Volvo’s shares should gain 20.6% over the next 12 months. That’s the second-best return potential of all companies traded on the benchmark OMX Stockholm Index. It’s also roughly double Volvo’s historical average over the past decade.
Further to Go
“As long as the truck and construction-equipment markets remain stable to up, which is what we expect, we think there is room for further improvement,” Phillips said by phone. “The problem is that people have generally expected the markets, mainly the truck markets, to turn down again.”