Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Bernstein upgrades Porsche to Market-Perform as automaker changes strategy

EditorHari Govind
Published 16/10/2023, 11:58 pm
© Reuters.
PSHG_p
-
VOWG_p
-
POAHY
-

Bernstein upgraded their coverage of German automaker, Porsche (OTC:POAHY) to a Market-Perform rating (From Underperform) and cut their 12-month price target by €1 to €90.00 as analysts see the company shifting its strategy from model-driven volume growth to a pricing-led model.

“The company's margins have trended in the upper teens, and we see the current strategy to reach 17% to 19% EBIT margin as a realistic outcome,” wrote the analysts at Bernstein in a note.

Nevertheless, Bernstein predicts a more sluggish increase in both volume and pricing, ranging between 4% and 6% per annum, in contrast to the company's projected 7% to 8% growth and the even loftier consensus expectations.

All major markets are showing signs of weaker consumer demand. Due to the importance of pricing and residual values in their strategy, Porsche is expected to limit its growth in the near future.

The delay of the electric Macan in 2024 will add to this challenge. While this delay will help Porsche avoid excessive discounts and continue to benefit from their price increases in 2023, it will also restrict their revenue growth in 2024 and 2025.

Bernstein’s forecast leads to a 5% EPS growth in 2024 and 2025, reaching €5.99 EPS in '24 and €6.33 EPS in '25. These figures fall 5% and 7% below the general consensus.

The company is aiming for a 50% dividend payout, and despite elevated capex, there should be no difficulty in achieving the target. The main risk could arise from any additional technology delays by Volkswagen (ETR:VOWG_p), potentially affecting Porsche's product cycle and necessitating increased investment by the company.

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.