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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.