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Citi has adjusted its stance on Bayerische Motoren Werke AG (BMW (ETR:BMWG): GR) (OTC: BMWYY (OTC:BMWYY)), upgrading the stock from Sell to Neutral while maintaining a price target of €74.00.
The reassessment follows BMW's unexpected profit warning earlier in September, which has set a new tone for the company's financial expectations.
The upgrade comes after a period of recalibration for BMW, with the analyst noting that both the company and the automotive sector at large are currently valued near five-year lows when compared to the market.
The valuation reflects a significant shift in expectations, as BMW's forecasted 6.5% Auto EBIT margin for the fiscal year 2024 is seen as close to a sustainable level, moving away from the higher earnings reported in 2022 and 2023.
Despite the upgrade, Citi acknowledges that BMW still faces several risks, including potential declines in price and mix, worsening demand and credit conditions, and additional challenges in the Chinese market. These factors could impact the company's earnings before interest and taxes (EBIT).
In other recent news, Bayerische Motoren Werke AG (BMW) has seen a flurry of analyst activity following substantial adjustments due to a significant recall and a guidance downgrade.
Citi upgraded BMW from a Sell rating to Neutral, maintaining a €74.00 price target, and removed BMW from its Focus List. The firm's analysis suggests a projected 6.5% Auto EBIT margin for fiscal year 2024, indicating a normalization of earnings.
However, potential risks were identified, including declines in pricing and product mix, worsening demand, and credit conditions.
Meanwhile, Bernstein SocGen Group lowered its price target for BMW to €86 from €96 but maintained an Outperform rating, reflecting confidence in BMW's approach.
UBS cut the price target for BMW shares to €75 from €94, maintaining a Neutral stance, primarily due to a lowered earnings per share forecast for the upcoming years. HSBC also adjusted its price target to €85 from the previous €109 but continues to recommend a Buy rating for the stock.
Despite these challenges, BMW continues to maintain steady profitability, aiming to meet its 2024 targets, including an ambitious over €6 billion free cash flow for the year.
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