Morgan Stanley reiterated an Equal-Weight rating and a 12-month price target of EUR100.00 on BMW (ETR:BMWG) after the German automaker reported positive 3Q results on Friday.
“We expect BMW shares to see a small positive market reaction (relative to SXAP) on the back of today's 3Q-2023 scheduled release.” analysts at Morgan Stanley wrote in a note.
The company reported 3Q revenues of EUR38.5B, ahead of the consensus estimate of EUR37.5B. EPS for the 3Q was $4.20, missing the consensus estimate of $4.49, but coming in $0.49 ahead of Morgan Stanley’s estimate.
Auto revenues have experienced a 0.6% decline, amounting to €32.1bn for BMW. However, the company asserts that these figures would have increased by 6.5% without FX headwinds.
Unit sales have shown a 5.8% year-over-year growth in the quarter which, excluding FX, implies what analysts at Morgan Stanley see as a resilient 3Q net price/mix.
EV sales accounted for 15.1% of the total sales in the third quarter, surpassing BMW's year-end target of 15%. The sales growth is being driven by models from the upper price segment, including the 7 Series, the updated BMW X7, as well as the BMW X5 and BMW X6 models.
Management seems positive about the company’s 4Q, expecting a further boost from the launch of new products like the new 5 Series, X1, and the 7 Series. According to analysts at Morgan Stanley, the current numbers and the promising future should be enough to support the company's shares today.
When questioned about the possibility of BMW reducing prices to stimulate electric vehicle demand, especially in China where intense market share competition has unfolded throughout the year, Chief Executive, Oliver Zipse emphasized that this strategy was not part of BMW's approach.
"We have no interest in sinking prices to gain market share. That's not our strategy. And as you can see, we are managing to grow substantially even with very acceptable prices," said Zipse.
The luxury car manufacturer has projected an annual EBIT margin of 9.0% to 10.5% for its cars division and is currently on track to achieve that goal, boasting a 10.3% margin thus far this year.