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On Thursday, Bernstein SocGen Group maintained a positive outlook on Bayerische Motoren Werke AG (BMW (ETR:BMWG):GR) (OTC:BMWYY (OTC:BMWKY)), reiterating an Outperform rating and a price target of EUR92.00. The reaffirmation follows BMW’s first-quarter earnings report released on May 7, 2025, which showcased earnings that surpassed consensus expectations despite a slight shortfall in revenue. This performance was attributed to an unexpectedly high Automotive margin.
BMW’s financial results for the first quarter of 2025 revealed a substantial dip in free cash flow (FCF), falling short of market predictions. The decrease was primarily due to increased capital expenditure outflows linked to the fourth quarter of 2024, along with higher tax payments and greater utilization of provisions. These factors negated the positive impact of a year-over-year reduction in restocking.
Despite these challenges, BMW has chosen to maintain its full-year 2025 guidance for both earnings before interest and taxes (EBIT) and free cash flow (FCF). This decision rests on the anticipation that the current elevated tariff levels in the United States will likely decrease in the second half of 2025. The company’s CEO, Oliver Zipse, faced numerous inquiries regarding this expectation, particularly about the company’s interactions with the Trump administration and South Carolina politicians. BMW is a significant employer in South Carolina, contributing extensively to the state’s economic prosperity.
While Zipse did not provide detailed insights into the discussions with U.S. officials, the analyst at Bernstein SocGen Group believes there is substance to BMW’s assumptions about tariff reductions. The analyst suggests that BMW’s expectations for tariff trends are not based on wishful thinking but are likely informed by ongoing developments.
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