J.P. Morgan has downgraded Swedish bearings manufacturer SKF to “underweight,” citing concerns about margin delivery and currency impacts. The firm anticipates headwinds from the company's automotive separation delay, which is now slated for the fourth quarter of 2026. Automotive accounts for a significant portion of SKF’s revenue, making the delay a key factor.

The brokerage reduced its price target for SKF shares, reflecting lowered adjusted EBIT forecasts for 2026 and 2027. The analysts point to a sluggish automotive market and rising uncertainty surrounding margin delivery as critical issues. FX headwinds, particularly the depreciation of the Swedish krona, are further pressuring the company.

The delay in the automotive unit's separation raises questions about incremental costs tied to the break-up and complicates the industrial strategy. J.P. Morgan believes early-2026 net effects will remain negative despite the company's efficiency program. The report also expressed concern about a meaningful margin rebound.

Investors should watch how the company navigates the FX strains and the automotive separation. SKF’s ability to offset separation costs and improve industrial margins will be key. Furthermore, the firm's organic growth in the first quarter is expected to be modest, and pricing support remains weaker than in the past, putting pressure on margin expansion.