🎈 Up Big Today: Find today's biggest gainers with our free screenerTry Stock Screener

Bernstein upgrades BMW to Outperform as automaker is determined to sell EVs in China

Published 07/11/2023, 12:54 am
© Reuters.
BMWG
-

Bernstein upgraded BMW (ETR:BMWG) to an Outperform rating (From Market Perform) with a 12-month price target of $110.00on the German automotive stock.

“BMW is the company in our coverage you can rely on to outperform its peers when market conditions get tough.” Wrote analysts at Bernstein in a note.

BMW reported largely in-line 3Q/23 earnings results, missing EPS estimates by $0.27. Bernstein believes that the miss could be explained by -€289m in interest rate hedging transactions, which affected PBT.

The company also added detail to mid-term guidance, giving investors more confidence in BMW's ~€7bn FCF target, and the shareholder distributions it will fund.

BMW's shares have declined -15% since late July, in-line with the broader European autos sector. Increasing worries on a delayed recovery and increasing competition in China have been a significant headwind for the sector.

However, the German luxury automaker believes that “without selling BEVs in China, there can be no growth.”

BMW has responded to market trends by eliminating the price premium on a majority of its Battery Electric Vehicles (BEVs), yet it continues to experience favorable contributions from BEV sales.

This strategy has facilitated the expansion of the company's market share in the electric vehicle sector in China, leading to a volume growth of +3.4% YoY over the course of 9 months. This growth is in line with the broader trends in the Chinese market (+3.6%) and exceeds that of its German counterparts.

Bernstein maintained its 2024 forecast at €11.5bn net income and €7.3b FCF. BMW's reintroduction of the Group EBT margin target of over 10% is expected to enhance investor confidence in the company's sustained earnings and FCF performance.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.