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Porsche SE down as UBS downgrades to Neutral post FY23 results

Published 02/04/2024, 08:42 pm
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On Tuesday, UBS analysts downgraded Porsche SE stock to Neutral from Buy and reduced the target price to €52 from €55 following the company’s financial results for the fiscal year (FY) 2023.

The company’s shares fell 0.8% in Frankfurt trading.

“Porsche SE continues to own an economic stake of 31.9% of VW Group and 12.5% of Porsche AG (ETR:P911_p) (P911) as of year end 2023. We have a Sell rating on VW with a price target of €100 on the pref. shares. We rate Porsche AG Buy with a PT of €104/share,” analysts said in the note.

UBS analysts note that Porsche SE's net debt reached €5.7 billion following FY23, highlighting a need for further deleveraging in the future.

“This should limit upside to dividend payments over that period, we believe,” analysts said.

They also pointed out increased leverage resulting from the P911 transaction and rising funding costs due to partially variable debt. As a result, the company’s net asset value (NAV) discount has widened to 44%, above the long-term average of approximately 30%.

“As a mean reversal of the NAV discount towards the historic ~30% level could take longer to materialise and given the operational headwinds VW (Sell-rated) is facing, we prefer direct exposure to Porsche AG (P911) over PSE shares,” analysts said.

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