On Tuesday, Bernstein SocGen Group revised its price target for Bayerische Motoren Werke AG (BMW (ETR:BMWG):GR) (OTC: BMWYY (OTC:BMWYY)) shares, lowering it to €86 from €96. However, it still recommends the stock as Outperform.
The adjustment follows a significant 11% drop in BMW shares last Tuesday after the automaker issued a guidance downgrade. This move was prompted by a substantial recall impacting 1.53 million vehicles fitted with an advanced braking system from supplier Continental, coupled with a sluggish performance in the Chinese market.
The analyst from Bernstein SocGen Group has considered recent discussions with the company and adjusted expectations, leading to a 16% reduction in the forecasted EBIT for the fiscal year 2024.
This recalibration reflects both the anticipated sales impact and a provision set for the third quarter of 2024. Despite these changes, the projected Automotive EBIT margin remains at 6.8%, which aligns with the upper range of BMW's new guidance of 6-7%.
BMW's response to the recall and market challenges appears to be measured, with the firm setting conservative estimates for the potential financial impact.
The analyst's confidence in BMW's prudent approach has resulted in the maintenance of the Outperform rating despite the lowered price target. The revised EBIT forecast and price target take into account the immediate financial implications of the recall and the current market conditions.
The automotive giant's recall and guidance revision are significant developments for investors and stakeholders. The announcement of the lowered price target by Bernstein SocGen Group provides a revised outlook on BMW's financial performance and stock potential in the near term.
The maintained Outperform rating suggests a continued positive long-term perspective on the company's stock, despite the immediate challenges it faces.
In other recent news, BMW has been in the spotlight due to significant changes in its financial outlook and various industry challenges. UBS has cut the price target for BMW shares to €75 from the previous €94, citing a lowered earnings per share forecast for the upcoming years.
This decision comes in light of a profit warning issued by BMW, largely attributed to costs associated with a brake system issue and weaker demand in the Chinese market.
Citi has decided to maintain its Sell rating on BMW shares, with a steady price target of EUR74.00, reflecting broader negative trends within the automotive industry.
HSBC (LON:HSBA), despite a more severe than anticipated impact from a brakes-related recall, maintains a Buy rating for the stock while adjusting the price target to €85 from the previous €109.
Jefferies, a global investment banking firm, has revised its price target for BMW to EUR 80.00, down from EUR 95.00, while maintaining a Hold rating.
This decision was influenced by BMW's recent guidance revision, which included a significant warranty and repair issue related to braking, and a greater than expected impact from reduced sales volumes in China.
Addressing potential declines in the automaker's profit margins, RBC Capital maintained its Sector Perform rating and €98.00 stock price target for BMW. These recent developments reflect the ongoing pressures faced by BMW and the automotive industry at large.
InvestingPro Insights
In light of the recent guidance downgrade and recall issues faced by Bayerische Motoren Werke AG (BMWYY), it's worth considering additional insights from InvestingPro. Notably, BMWYY is trading at a low earnings multiple with a P/E Ratio of just 4.35, which might indicate that the stock is undervalued relative to its earnings. This is further substantiated by the fact that the company pays a significant dividend to shareholders, boasting a dividend yield of 5.78% as of the last dividend ex-date. The reliability of BMWYY in providing shareholder returns is evident, as the company has maintained dividend payments for 33 consecutive years.
Despite facing headwinds, BMWYY remains a prominent player in the Automobiles industry. Analysts predict the company will be profitable this year, and it has been profitable over the last twelve months. This resilience in maintaining profitability, combined with a strong dividend history, may offer some solace to investors concerned about the recent stock price volatility.
For those seeking further analysis and tips, InvestingPro offers a suite of additional insights, including an assessment of BMWYY's fair value and stock performance metrics. There are 8 more InvestingPro Tips available that delve deeper into the company's financial health and market position. These can be accessed by visiting the InvestingPro platform.
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