RBC Capital has adjusted its view on Volvo AB (OTC:VLVLY), shifting the rating from Outperform to Sector Perform while simultaneously raising its price target to SEK360 from SEK350. The Swedish automaker, with a market capitalization of $79.3 billion, has traded near its 52-week high of $39.62 and the shares are up more than 37% over the past year.
RBC pointed to what it described as "a period of strong operational performance" at Volvo and said the company had demonstrated defensive characteristics in difficult end markets. Those attributes, according to InvestingPro data cited by RBC, include a 3.83% dividend yield and a record of increasing dividends for three consecutive years.
Despite acknowledging those strengths, RBC analyst Nick Housden said the firm prefers companies with greater North American exposure as that market shows signs of improvement - a geographic focus that weighed on the decision to move Volvo to Sector Perform. RBC also noted that Volvo currently trades at about 16 times expected 2026 earnings per share, a multiple the firm said sits well above the company’s historical average following the recent run-up in the stock.
At the same time as lowering the rating, RBC raised its 2026 and 2027 earnings per share forecasts for Volvo by 3%, a revision that contributed to the modest rise in the new SEK360 price target.
Other broker actions have reflected a similar mix of appreciation for operational results and concern about valuation. Volvo’s fourth-quarter results beat expectations by roughly 10% versus Kepler Cheuvreux’s forecast. Kepler Cheuvreux reacted by cutting its recommendation from Buy to Hold, citing valuation concerns, while increasing its price target to SEK325 from SEK285 prior to the earnings release and then adjusting it to SEK335 while maintaining the Hold rating.
Morgan Stanley also moved to temper its stance on Volvo, downgrading the stock from Overweight to Equalweight and lifting its price target to SEK323 from SEK305. The Morgan Stanley note attributed the change to Volvo’s recent strong performance and the firm’s assessment of limited short-term upside.
Taken together, the recent analyst moves illustrate a divergence between Volvo’s solid near-term results and increasing caution around valuation and regional exposure among research providers. The company’s elevated multiple and the geographic mix of its operations were specifically referenced as reasons for more conservative stances despite upward revisions to earnings estimates from some houses.
Background data cited in analyst notes
- Market capitalization cited: $79.3 billion.
- 52-week high cited: $39.62.
- Shares performance: up over 37% in the past year.
- Dividend yield cited: 3.83%, with three consecutive years of dividend increases.
- RBC price target change: increased to SEK360 from SEK350 while rating moved to Sector Perform from Outperform.
- RBC EPS revisions: 2026/2027 EPS forecasts raised by 3%.
- Valuation cited: trading at 16 times expected 2026 P/E.