European autos face persistent earnings weakness in 2025, UBS says
03/12/2024 10:48
** UBS expects negative earnings momentum in the European
auto sector to persist in 2025 due to pricing pressure, market
share losses in China, tighter CO2 regulation, tariff risks and
lacklustre demand
** "For as long as the end of the downgrade cycle isn't
visible, any potential bounce from current lows will likely be
short-lived," it says
** For auto suppliers, UBS expects lack of volume growth,
low visibility on OEM production schedules and high cost
pressure to cement profit margins at the current low levels
** It upgrades BMW BMWG.DE to "buy" from "neutral" citing
improving FCF and potential cash returns of up to 15%
** It cuts Mercedes-Benz MBGn.DE to "neutral" from "buy"
on worse FCF trend and higher CO2 and U.S. tariff risks compared
to BMW, and no product cycle support until late in the year
** It downgrades Porsche AG P911_p.DE to "neutral" from
"buy", saying it doesn't see substantial earnings growth in 2025
despite the group's fresh product line-up
** On the supplier side, it cuts Forvia FRVIA.PA and Valeo
VLOF.PA to "neutral" from "buy" and Gestamp GEST.MC to
"sell" from "neutral"
** Continental CONG.DE ("buy") is UBS's supplier top pick
combining a solid tires business with upside potential from a
possible automotive spin-off in 2025
(Reporting by Amir Orusov)
((Amir.orusov@thomsonreuters.com))