On Monday, UBS revised its stance on Porsche Automobil Holding SE (PAH3:GR) (OTC: POAHY), downgrading the stock from Neutral to Sell. The firm also reduced the price target from €42.00 to €32.00.
The stock, currently trading at $3.64, sits near its 52-week low of $3.47, with InvestingPro analysis suggesting the shares are undervalued. The downgrade comes as UBS updated its financial model for Porsche SE, which holds a significant stake in the automotive industry.
Porsche SE owns a 31.9% economic interest in the Volkswagen (ETR:VOWG_p) Group and a 12.5% stake in Porsche AG (ETR:P911_p) (P911) as of the third quarter of 2024. This ownership structure is a key consideration in the valuation and prospects of Porsche SE's stock, which trades at a notably low Price/Book ratio of 0.19 and offers a 4.87% dividend yield, maintaining dividend payments for 29 consecutive years.
In conjunction with the downgrade of Porsche SE, UBS also maintains a Sell rating on Volkswagen Group, with a reduced price target of €75 for the preferred shares. The bearish outlook on VW Group reflects in the overall assessment of Porsche SE, given the substantial interest Porsche SE has in the automaker.
Moreover, UBS recently adjusted its view on Porsche AG, moving from a Buy to a Neutral rating and setting a new price target of €61. This change in rating for Porsche AG, a notable asset in Porsche SE's portfolio, further impacts the investment firm's perspective on Porsche SE's financial future.
The series of downgrades and price target adjustments by UBS signal a cautious view of Porsche SE's investment value, as well as its related entities in the automotive sector. While the stock has declined 29% over the past six months, InvestingPro data reveals a strong financial health score of 3.01 (rated as GREAT), with liquid assets exceeding short-term obligations. The platform offers 12 additional investment tips for Porsche SE, helping investors make more informed decisions in this challenging market environment.
In other recent news, Porsche Automobil Holding SE faces significant financial pressure due to potential cuts in Volkswagen's dividends. HSBC has downgraded Porsche's stock from Hold to Reduce, lowering the price target from €36.00 to €26.00. This shift reflects concerns over Volkswagen's dividend and its potential impact on Porsche's cash flow.
Similarly, Stifel downgraded Porsche's rating from Buy to Hold and reduced the price target from EUR69.00 to EUR45.00 due to revised expectations for Volkswagen's earnings per share (EPS) and its dividend payout ratio.
Despite these financial concerns, Porsche reported steady vehicle deliveries in the first three quarters of 2024, despite a 7% drop compared to the previous year. The Cayenne led Porsche's sales with 77,686 units sold, a 21% increase due to its market launch a year ago. However, the Macan saw a 20% drop to 55,000 deliveries, largely due to a model changeover.
On a different note, Barclays (LON:BARC) has upgraded Westlake's stock, citing potential in cash deployment and housing recovery. These recent developments reflect the evolving financial landscape for these companies and the market's response to these changes.
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