(CercleFinance.com) – Oddo BHF maintains its ‘neutral’ rating on Volkswagen with a price target lowered from 125 to 110 euros after the manufacturer published a press release on Friday evening announcing preliminary 3rd quarter results below expectations (- 14% on EBIT vs. VA cons.).
VW highlights difficulties encountered in terms of supply chain (floods in Slovenia) and the increase in ‘Product Costs’, particularly within the Brand Group Core entity (ie volume brands).
According to the broker, the manufacturer should remain under pressure and the difficulties encountered in negotiations with the German unions (an outcome is now expected at the beginning of December) are not a signal going in the right direction.
The guidance nevertheless remains in line with expectations (the manufacturer is still targeting volumes of 9.0-9.5m units, turnover up 10-15%, Automotive FCF up sharply (vs. 4.8 billion euros) and net liquidity industrial value of 35-40 billion euros) but Oddo BHF believes that the manufacturer ‘will have to convince’.
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