On Friday, CFRA raised the price target on Bayerische Motoren Werke AG (BMW (ETR:BMWG):GR) (OTC: BMWYY (OTC:BMWYY)) to EUR100.00, up from the previous EUR95.00, while keeping a Hold rating on the shares. The adjustment reflects a price-to-earnings (P/E) ratio of 5.8x, which the firm views as a justified discount to the company's historical averages.
The analyst at CFRA affirmed the adjusted earnings per share (EPS) estimates for the company at EUR16.00 for 2024 and EUR17.15 for 2025.
BMW reported fourth-quarter earnings per share of EUR3.77, a 10% increase from EUR3.43 in the same period last year, but fell short of the EUR4.10 consensus. The earnings miss was attributed to weaker-than-expected profit margins, despite a 9% year-over-year increase in revenue to EUR43.0 billion, which was EUR1.9 billion higher than consensus estimates.
The German automaker has introduced its full-year guidance for 2024, projecting Automotive and Motorcycle EBIT (earnings before interest and taxes) margins to range between 8% and 10%. However, BMW anticipates a slight decline in pretax earnings for the year. In 2023, the company achieved Automotive and Motorcycle EBIT margins of 9.8% and 8.1%, respectively.
The analyst cited the lack of immediate catalysts for maintaining the Hold rating on BMW's stock. The report noted that BMW and other European automakers experienced a robust top-line recovery in 2023, with BMW's total revenue growing by 9% on the back of a 10% increase in vehicle deliveries. Still, this sets a high bar for 2024, making year-over-year comparisons more challenging.
BMW and its industry peers are facing economic pressures, particularly from a "higher-for-longer interest rate environment." This financial climate is expected to pose challenges for the automotive sector as it navigates through the current fiscal year.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.