Dürr AG Downgraded by Berenberg on Auto Sector Dependence, EV Transition Risks

Berenberg has downgraded German engineering firm Dürr AG to "Hold" from "Buy" and slashed its price target to €21 from €40, citing the company's heavy reliance on capital expenditures from the automotive industry. Analysts expressed concern over Dürr's end-market exposure as automakers navigate a volatile and complex transition to electric vehicles (EVs).

Downgrade Rationale

The rating change reflects Dürr's significant dependence on automotive original equipment manufacturers (OEMs), even after restructuring efforts that began in 2023. According to Berenberg's note, Dürr's total dependency on automotive OEM capex is estimated to be around 53% of its total sales.

"As the global automotive industry is currently navigating a very volatile and complex transition to electric vehicles, we do not feel comfortable with Dürr’s automotive end-market exposure," the analysts stated. This uncertainty in the auto sector presents a significant risk to Dürr's business model, given its market-leading position in automotive paint shops and application technology.

Diversification and Growth Headwinds

Berenberg highlighted that Dürr's other business segments are not currently strong enough to offset the risks in the automotive market. The company's woodworking division, which is expected to account for about 29% of 2025 sales, remains exposed to weak consumer confidence and discretionary spending.

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Furthermore, businesses identified for growth, such as production automation and construction solutions for timber houses, were noted to account for only about 14% of total sales in 2025. Management has also scaled back its sales expectations for battery technology to an annual volume of €50 million to €100 million, down from a previous forecast of €300 million to €500 million. In light of these reduced growth dynamics, Dürr has placed its initial 2030 sales target of at least €6 billion under review.

Valuation and Outlook

Berenberg forecasts a sales compound annual growth rate (CAGR) of 2.3% for Dürr over the 2025-2028 period, with the adjusted EBIT margin improving to 6.8%. The analysts noted that Dürr's shares are trading at approximately 5.4 times EV/EBIT for 2027, which is significantly below the five-year average of 8.7 times, reflecting the market's view of the structural shifts in its end-markets.

Berenberg's new €21 fair value is based on a discounted cash flow model and a peer group comparison. The firm indicated it would "turn more positive if Dürr showed a meaningful reduction in the automotive-capex-related business and/or the automotive end-market became less volatile and returned to structural growth."