Deutz AG: Course rocket starts through-US expansion and military contracts as a driver!

Deutz AG: Course rocket starts through-US expansion and military contracts as a driver!

DEUTZ AG, a renowned manufacturer of drive systems, is currently talking about itself. Since the beginning of the year, the Cologne mechanical engineering company's share has increased by a remarkable 80 percent and is currently listing 7.40 euros. The technical analysts see a promising purchase signal as soon as the brand of 8 euros is broken, with a possible price target up to 10 euros. This reports it-boltweise .

An essential driver behind this positive development is the increasing demand for industrial motors, especially in the construction machine area. There is also speculation about new military contracts that could boost demand for generator aggregates. These market changes have led to analysts from Warburg Research have caught a goal of 10.90 euros, while the DZ Bank suggests a high estimate of 8.30 euros.

expansion to the USA

Another key to Deutz 'success is the strategic expansion to the US market. The takeover of the overseas Logistics Services (OLS) in South Carolina has already been carried out. OLS will be responsible for the supply of the spare parts of North American customers and was able to pay sales of around $ 45 million in 2024. This commitment aims to increase the margin service business from currently 25 percent to 30 percent of the overall result. Sebastian Schulte, the CEO of Deutz, emphasizes the logistical competence of OLS, which is also to be used in the defense area.

The gross margin will also benefit from this takeover, which makes the company even more competitive, especially in the highly demanding off-highway market. Deutz is active in this industry, in which the demand for reliable drive systems is unbroken, not least because of the progressive mechanization in agriculture and the increasing construction projects.

A look at the market

The market for off-highway vehicle engines shows significant growth opportunities. According to a current investigation, the market size is estimated at $ 37.21 billion in 2023, with a forecast of $ 54.67 billion by 2029. Annual growth is given as 6.79 percent. Europe is the fastest growth in the region. The need in the construction industry is considered particularly strong, which strengthens the position of companies like Deutz. A report by Mordor Intelligence emphasizes that the COVID-19 pandemy briefly led to a decline in sales, but noticeably after the pandemic rose.

In addition, strict environmental standards are expected to have a positive effect on the market for off-highway engines to reduce carbon emissions. From sustainable drives, be it diesel or electrical, not only benefit the manufacturers, but also the end consumers through lower operating costs and maintenance expenses.

Overall, it turns out that Deutz AG has skillfully positioned itself in a promising market. Investors are optimistic about sustainable profitability that could be generated by the expansion of the service and the expansion to the USA, as well as the potential business in the defense area. However, the question remains how the general economy and the defense budgets will develop in order to maintain this euphoria.