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On Tuesday, Citi analysts adjusted their financial outlook for Bayerische Motoren Werke AG (BMW (ETR:BMWG):GR) (OTC: BMWYY (OTC:BMWKY)), increasing the price target from EUR75.00 to EUR78.00. The firm kept a Neutral rating on the stock. The revision follows BMW’s Q4 2024 report, which presented mixed signals due to strong retail deliveries contrasted by lower wholesale volumes and production figures. Additionally, the report indicated increased research and development capitalization alongside reduced provisioning.
The analysts noted the difficulty in ascertaining the underlying EBIT margins as BMW heads into the fiscal year 2025. Despite the challenges, they acknowledged BMW’s solid and consistent strategic management, impressive battery electric vehicle (BEV) performance, and the anticipated Neue Klasse model series. They also highlighted BMW’s substantial cash reserves, factors which make the company an attractive option for investors looking to capitalize on a potential European Union manufacturing recovery.
However, concerns were raised regarding BMW’s significant exposure to the Chinese market, which accounts for over 30% of the company’s EBIT. With sales in China continuing to decline sharply, the analysts expressed skepticism about the optimistic sales growth and flat China sales assumptions that underpin the company’s guidance for fiscal year 2025. Citi forecasts a roughly 2% decline in unit sales, primarily driven by the Chinese market, and anticipates an Auto EBIT margin below the midpoint at 5.8%.
The revised price target of EUR78.00 is primarily supported by BMW’s net cash position, according to the analysts’ discounted cash flow (DCF) analysis. Despite the price target increase, Citi’s stance remains cautiously neutral on BMW stock, reflecting a balanced view of the company’s operational strengths and market challenges.
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