A Citi analyst has issued an upgrade for Bayerische Motoren Werke AG (BMW (ETR:BMWG): GR) (OTC: BMWYY (OTC:BMWYY)), changing its previous Sell rating to Neutral. The firm has set a price target for BMW at €74.00, maintaining its previous target despite recent market developments.
The adjustment follows BMW's unexpected profit warning earlier in September, which has significantly altered market expectations. The analyst noted that both BMW and the broader automotive sector are currently valued near five-year lows when compared to the market. This valuation reflects a significant adjustment of investor expectations.
Citi's analysis suggests that BMW's projected 6.5% Auto EBIT margin for the fiscal year 2024 appears to be a sustainable figure, indicating a normalization of earnings rather than a recessionary dip. This is in contrast to the higher profitability seen in 2022 and 2023.
However, the analyst also pointed out several risks that could impact BMW's EBIT. These include potential declines in pricing and product mix, worsening demand and credit conditions, and further market challenges in China.
Despite these concerns, Citi believes that BMW's current market capitalization, which is closely aligned with its new Automotive Financial Asset (cash) value, does not support a Sell rating.
Consequently, BMW has been removed from Citi's Focus List. The firm also noted that it has reduced its estimates for BMW's earnings per share (EPS) and dividend but has decided to maintain the price target of €74.00.
In other recent news, Bernstein SocGen Group revised its price target for BMW, lowering it to €86 from €96, yet maintained an Outperform rating, reflecting their confidence in BMW's prudent approach.
UBS, on the other hand, cut the price target for BMW shares to €75 from €94, maintaining a Neutral stance, primarily due to a lowered earnings per share forecast for the upcoming years.
Citi kept its Sell rating on BMW shares, with a steady price target of EUR74.00, reflecting broader negative trends within the automotive industry. HSBC also adjusted its price target to €85 from the previous €109, but continues to recommend a Buy rating for the stock. Jefferies revised its price target for BMW to EUR 80.00, down from EUR 95.00, while maintaining a Hold rating.
InvestingPro Insights
In light of Citi's neutral stance on Bayerische Motoren Werke AG (BMWYY), recent data from InvestingPro shows that BMW is trading at a low earnings multiple, with a P/E Ratio of 4.43 and an adjusted P/E Ratio for the last twelve months as of Q2 2024 at 4.34. This valuation could suggest that the stock is undervalued, particularly as analysts predict the company will be profitable this year. Adding to the investment appeal, BMW pays a significant dividend to shareholders, boasting a dividend yield of 5.8% as of the latest data, and has a commendable track record of maintaining dividend payments for 33 consecutive years.
However, it's worth noting that the company has experienced a notable stock price decline over the last six months, with a 27.04% total return decrease. This aligns with Citi's observation of market challenges and may reflect investor reactions to the broader industry and economic concerns. Despite this, BMW's status as a prominent player in the Automobiles industry and its profitability over the last twelve months could provide some resilience.
For investors considering BMW as part of their portfolio, there are additional insights to be found. InvestingPro offers more tips and data metrics for BMWYY, which can be accessed for a deeper analysis of the company's financial health and market position. In total, there are 7 additional InvestingPro Tips available that can further guide investment decisions.
For those looking to explore these insights further, visit https://www.investing.com/pro/BMWYY to access the full suite of InvestingPro Tips and detailed financial metrics.
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