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Monday - Barclays (LON:BARC) has increased the price target on Volkswagen AG (ETR:VOWG) (VOW:GR) (OTC: OTC:VWAGY) shares to EUR105.00, up from EUR100.00, while maintaining an Overweight rating. Stifel analysts attribute this change to Volkswagen (ETR:VOWG_p)'s strong fourth-quarter performance, which aligned with the company's revised full-year guidance issued following a profit warning in September.
Volkswagen's fourth-quarter sales reached approximately 2.5 million units, matching the forecast and contributing to the annual target of around 9 million unit sales. This performance was bolstered by robust year-end volumes from the Porsche 911 model, which is expected to support the company's full-year EBIT margin guidance of 14-15%. Despite a dip in Audi's fourth-quarter deliveries, the luxury brand's overall sales and improved product mix are still anticipated to meet the double-digit EBIT margin guidance for the quarter.
The company's recent labor agreement, which averted potential strikes in December, is not expected to significantly affect the financial results for the year. Moreover, Volkswagen reiterated its commitment to a €4 billion savings target for the mid-term, a revision from the previous 2026 goal. This announcement, along with the maintained 30% dividend payout ratio target, suggests a stable outlook for the company.
Barclays forecasts Volkswagen's fourth-quarter EBIT to be €5.3 billion, with a 6.3% margin, and anticipates no one-off items or impacts from hedge accounting to skew these results. However, the firm expects a negative free cash flow (FCF) of €1.1 billion in the quarter, attributing this to typical high year-end investment spending and the financial impact of the Rivian (NASDAQ:RIVN) acquisition.
Overall, Barclays analysts believe that there is additional potential for Volkswagen's stock price to rise, driven by successful execution of the €4 billion savings plan within the VW brand, as well as growth in earnings from other segments such as Audi, Porsche, and Traton. These expectations appear to be in line with current consensus views.
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