Barclays remains negative on EU Autos sector, cuts Porsche SE, Mercedes to 'equal-weight'
24/11/2023 10:27
** Barclays remains negative on EU Autos, while flagging a
slight preference for suppliers over original equipment
manufacturers (OEMs)
** The broker sees normalising pricing/discounts as "a
strong headwind" for OEMs, likely to fuel "peak earnings"
narrative and make re-rating "elusive"
** Suppliers, however, should profit from a positive
earnings trajectory from depressed levels, it says
** Barclays downgrades German automobile holding company
Porsche SE PSHG_p.DE to "equal-weight," citing current
valuation of its stake in Volkswagen AG VOWG_p.DE and Porsche
AG P911_p.DE
** The broker also cuts German luxury carmaker Mercedes-Benz
MBGn.DE to "equal-weight" from "overweight," noting recent FY
guidance cut and wide range of headwinds
** The negative catalysts affecting Mercedes-Benz include,
among others, negative Q1-Q4'23 margin trajectory and
expectations of an industry-wide price normalisation in FY
2024/25, it says
** Although Barclays likes " Mercedes' 'higher-price,
lower-volume', 'top-end premium' propositions," it notes, the
company will need to make MB Cars unit reach 12-14% EBIT margin
range in 2024, "before getting credit for earnings resilience"
** At 10:15 GMT shares of holding company Porsche SE were
down 1.8%, Volkswagen VOWG_p.DE slipped 0.7%, and Mercedes
fell 0.3%
** Among suppliers it ups Forvia FRVIA.PA , Continental
CONG.DE and Gestamp GEST.MC to "overweight"
(Reporting by Amir Orusov)
((Amir.orusov@thomsonreuters.com))