Deutsche Bank has downgraded DCC PLC (LSE:DCC) to 'hold' from 'buy', citing growing uncertainty over global trade tariffs, particularly in its Technology division.
While the group's Energy business, which accounts for around 85% of continuing profits, is seen as relatively resilient, analysts caution that the backdrop has become less predictable.
DCC’s Technology arm is more directly exposed to potential trader frictions, and Deutsche sees this as a reason to pause. The broker has trimmed its price target from 6,000p to 5,500p.
On the Energy side, Deutsche notes that the business should continue to benefit from its defensive characteristics and a strong cash-generative reinvestment model.
Most of its US LPG supply comes from domestic production, reducing direct exposure to tariffs. However, the sector could still feel the effect of falling commodity prices and softer export demand, particularly if China imposes counter tariffs.
Despite these risks, volume pressure is expected to be limited. During the global financial crisis, organic volumes fell 10% over two years but were largely offset by acquisitions, a strategy DCC may continue to lean on.
The shares were flat in afternoon trading at 4,858p.