ST Engineering (S63.SI) shares plunged 7.73% in Tuesday's trading session, as investors reacted to a downgrade and growing concerns over the potential impact of U.S. tariffs on the company's operations. The significant drop comes amid a flurry of analyst reports assessing the risks and opportunities facing the technology, defense, and engineering group.
UOB Kay Hian delivered a blow to investor confidence by downgrading ST Engineering from Buy to Hold, setting a price target of SG$7.37. This downgrade likely played a crucial role in triggering the sell-off. Adding to the negative sentiment, Maybank Research highlighted potential demand risks stemming from U.S. tariffs, particularly for the company's commercial aerospace business. Analyst Krishna Guha noted that while management has mitigation plans in place, the tariffs could lead to deferred revenue in this segment.
However, not all analysts share the same level of concern. RHB Singapore's Shekhar Jaiswal suggests that the direct financial impact of U.S. tariffs on ST Engineering could be limited, citing the company's diversified portfolio as a competitive advantage. Jaiswal highlighted various mitigation measures being implemented by ST Engineering, including supplier diversification, alternative service locations, and stockpiling critical inventory. Despite the day's sharp decline, RHB maintains a buy rating on the stock with a target price of S$8.30, indicating potential upside from current levels. As trade tensions continue to evolve, investors will likely keep a close eye on ST Engineering's ability to navigate these challenges and maintain its market position.
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