Barclays sees 2026 margin support for European auto suppliers despite top-line pressure

Valeo SE

10/12/2025 13:42

** European auto suppliers are likely to face top-line pressure in 2026, Barclays says, adding self-help measures should support margins before their effects largely fade in 2027

** The 2026 momentum in the sector can be sustained by sentiment boost from European Commission's automotive package, the broker says

** Barclays cuts Continental CONG.DE to "equal-weight" from "overweight", pointing to "a good share price run" after Aumovio AMV0n.DE spin-off

** "Most of the initially anticipated value crystallization potential is now mostly priced in," Barclays says

** It, however, prefers Continental over Michelin MICP.PA ("underweight") due to the former's dividend policy and more confidence in its short-term earnings trajectory compared to the peer

** The broker starts Aumovio with "overweight", saying the co has a strong balance sheet among key EU-listed tier-one suppliers, allowing it to focus on self-help measures

** The brokerage also "likes the quality of its earnings/cash profile"

** Barclays sees an "attractive turnaround/deep value play" compared to its closest electronics-driven peer Valeo VLOF.PA ("equal-weight")

(Reporting by Amir Orusov)

((Amir.orusov@thomsonreuters.com))