BMW upgraded by Barclays as Q2 margin holds, tariff risks ease

Published 11/07/2025, 11:14
© Reuters

Investing.com -- Barclays (LON:BARC) has upgraded BMW AG (ETR:BMWG) to “equal weight” from “underweight” after the automaker confirmed its Q2 automotive EBIT margin will fall within its 5–7% full-year guidance range, in a note dated Friday. 

The brokerage also noted BMW’s guidance for full-year free cash flow of over €5 billion, above Bloomberg’s consensus of around €4.5 billion. 

The announcement followed a public pre-close call and contributed to a 4.1% rise in BMW’s share price, outperforming the SXAP index, which rose 2% on the day.

Barclays now forecasts a 5.7% automotive EBIT margin for 2025, in line with company guidance and above the prior Bloomberg consensus of 4.6%. T

his includes a projected H1 margin of 6.2% and a H2 estimate of 5.2%, factoring in modeled EU–US tariffs. Despite the modeled 17.5% tariff from H2 2025, BMW’s net-exporter status means it stands to benefit from any “netting” mechanism in a potential trade agreement, which could neutralize tariff costs.

Barclays’ new price target for BMW is €82.50, up from €73.50, based on an 80:20 weighted average of sum-of-the-parts and discounted cash flow valuation. 

The target implies a 7x P/E multiple on 2025–2027 estimates. BMW’s share price stood at €85.40 as of July 10, reflecting a 3.4% downside to the revised target.

Group EBIT is projected at €10.86 billion in 2025, with an EBIT margin of 7.5%. Automotive EBIT is expected to be €7.27 billion on revenue of €127.56 billion. 

Group revenue is forecast to rise modestly to €144.48 billion in 2025. Adjusted EPS is expected to remain stable at €13.88, with reported EPS at €11.61. 

Barclays models a 5% compound annual growth rate for EPS between 2025 and 2028, supported by €7 billion in share buybacks over that period.

Free cash flow is forecast at €4.52 billion in 2025, €4.77 billion in 2026, and €5.40 billion in 2027.

Dividend per share is projected to grow from €4.35 in 2025 to €4.71 in 2027. Automotive net financial assets are expected to remain flat at €45.74 billion through 2027. 

Capital expenditures are forecast to decline from €8.16 billion in 2025 to €7.67 billion in 2027, while R&D spending is projected to fall from €8.29 billion to €7.67 billion over the same period.

Despite structural headwinds across the European auto sector, Barclays said BMW’s stronger-than-expected Q2 performance, improving earnings visibility and potential tariff upside justify the upgrade. 

However, long-term margin recovery toward the 8–10% target remains uncertain, and sector-wide risks in China and from new competition persist.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2025 - Fusion Media Limited. All Rights Reserved.