On Tuesday, Citi analysts adjusted their outlook on Porsche AG (P911:GR), reducing the price target from €85.00 to €82.00 while maintaining a Buy rating on the stock. The revision follows Porsche's report of strong total sales for the fourth quarter of 2024, with 84,000 vehicles sold, and a robust full-year sales figure of 310,000 units, surpassing Citi's expectations.
Despite the positive sales performance, Citi noted that much of Porsche's success was driven by the Macan model, including the electric variant, and robust sales in Europe. However, the mix of the iconic 911 model fell to 13% of total sales, significantly lower than the year-to-date average prior to the fourth quarter. This shift in sales mix prompted the price target adjustment.
Citi's analysis suggests that Porsche's fourth-quarter earnings before interest and taxes (EBIT) are likely to exceed those of the third quarter, bolstering confidence that the company will meet or exceed the lower end of its 14.0%-15.0% automotive return on sales (RoS) guidance for the full year of 2024.
Looking forward, Citi anticipates a stronger mix of 911 sales in the fiscal year 2025, a recovery from headwinds faced by the China market and the Macan model in 2024, and a rise in average selling prices (ASPs). However, the firm also expects higher depreciation and amortization costs, adverse foreign exchange impacts, and increased supplier compensation to weigh on Porsche's financials. Consequently, Citi has reduced its forecasts for fiscal years 2025 and 2026 by approximately 5%.
The price target reduction reflects these mixed factors, balancing strong current sales performance with cautious projections for the upcoming fiscal years. Despite the lowered price target, Citi's ongoing Buy rating indicates a continued positive outlook on Porsche AG's stock performance.
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