AB Dynamics (LON: ABDF) is navigating a challenging global autos market, but analysts at Zeus Capital argue that the current backdrop could work in the company’s favour.
In a new report, Zeus analyst Robin Byde reiterated a Buy rating and 1,800p price target on the stock, stating that “testing times present an opportunity” for the group. The company’s shares are down over 39% in the last 12 months.
Zeus believes AB Dynamics offers “good value” despite ongoing fragility in the automotive sector.
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The firm highlighted resilient demand for simulation, validation and software-led testing, supported by “strong structural and regulatory drivers” tied to the electric-vehicle transition, increasingly sophisticated safety systems and autonomous-driving development.
Automakers are prioritising more capital-efficient research strategies and shifting toward virtual testing and simulation to reduce physical prototyping costs, a shift that Zeus argues “favours suppliers with scalable digital platforms.”
The broker noted that AB Dynamics is “one of the few globally significant players” with deep expertise, a broad customer base and balance-sheet strength that supports further growth.
Following the company’s first-half update, Zeus trimmed its revenue forecasts by around 3% to reflect weakness in China, where Testing Services revenue “roughly halved.”
Even so, the analyst kept profit expectations unchanged, citing stronger momentum in Testing Products and Simulation. The group’s net cash position of more than £39 million also remains “robust,” Zeus added.
The firm continues to expect around 20% growth in adjusted profit before tax between FY26 and FY28, alongside improving cash generation.
With AB Dynamics trading on a discount to sector peers, Zeus sees “good potential upside to the current subdued share price,” adding that weaker end-markets may even enhance M&A opportunities.
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