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On Thursday, Citi analyst Harald Hendrikse adjusted the price target for Porsche AG (P911:GR) shares, reducing it to €72.00 from the previous €82.00, while reiterating a Buy rating on the stock. The adjustment follows Porsche’s guidance on future earnings, which Hendrikse believes sets a conservative baseline that could benefit long-term investment perspectives.
Porsche’s current guidance for fiscal year 2025 earnings has been set lower than some investors might have hoped, leading to a potential short-term decline in the company’s stock price. However, the Citi analyst suggests that this conservative approach to earnings guidance could ultimately de-risk the stock, especially in the first half of 2025. This strategy might allow investors to adjust their expectations and consider the stock at a more attractive valuation.
The analyst pointed out that while the lower earnings guidance may be initially disappointing, it provides a new, lower base from which Porsche’s earnings could recover. This recovery, according to Hendrikse, is now projected to happen a year later than previously expected. For the earnings recovery thesis to hold, Porsche management will need to demonstrate the ability to stabilize earnings.
In light of this new guidance, Citi has revised its forecasts for Porsche AG. The firm acknowledges that investors may overlook the positive aspects of investing in Porsche in the short term due to the lowered earnings expectations. Nevertheless, the Buy rating suggests that Citi remains optimistic about the stock’s future performance, provided that Porsche can show evidence of earnings stabilization.
The reduction in the price target to €72 reflects the updated earnings forecast and the belief that Porsche’s earnings per share (EPS) is now considered less risky, at least for the first half of 2025. Investors will be looking for signs from Porsche management that earnings can indeed be stabilized as forecasted by Citi.
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