On Monday, Barclays (LON:BARC) analysts adjusted the price target for Mercedes-Benz (OTC:MBGAF) Group (MBG:GR) (OTC: DDAIF) shares to EUR 50.00, up from EUR 48.50, while maintaining an Underweight rating on the stock.
The revision followed Mercedes-Benz's fourth-quarter sales announcement on Friday, which led to a 3.7% increase in the company's share price by the end of the trading session, outperforming the SXAP's modest 0.5% gain.
Mercedes-Benz reported a year-over-year increase of 1% in total MB Cars unit sales, reaching 520,000 units for the quarter. Despite this, analysts at Barclays believe the consolidated unit sales might have been slightly lower than their earlier forecast. However, the mix of top-end vehicles (TEVs) sold by Mercedes-Benz was particularly strong, accounting for 15.9% of the total, which matched the percentage in the fourth quarter of the previous year and showed considerable improvement over the first three quarters of 2024.
The TEV mix is a crucial factor for the profitability of MB Cars, as these higher-end models contribute significantly more to earnings before interest and taxes (EBIT). It's estimated that while TEVs represent around 15% of volume, they account for over 50% of EBIT. Mercedes-Benz had previously indicated during their third-quarter report that they expected the fourth-quarter mix to improve compared to the third quarter, due to factors such as the model change-over for the G-Class and the launch of the electric G-Class, as well as the destocking of the S-Class.
In the Vans division, fourth-quarter sales for 2024 were down 15% year-over-year at 106,000 units. Barclays now forecasts that the Vans division will achieve a full-year margin at the lower end of its 14-15% target range. The updated forecasts by Barclays reflect the better-than-expected vehicle mix for the final quarter of 2024.
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