VOW3: Easing U.S. Tariffs Will Drive Sector Outperformance Against German Peers

Volkswagen’s analyst price target saw a modest decrease, down about EUR 0.48 to EUR 111.60. Analysts cite ongoing industry challenges and a cautious view on the European auto sector’s valuation.

Analyst Commentary

Recent research and commentary on Volkswagen reflect a mix of optimism and caution from major equity analysts. Their assessments focus on core challenges in the industry as well as Volkswagen’s performance relative to its peers.

• Bullish analysts have noted upgrades and reinstatements to Outperform, pointing to Volkswagen’s improved positioning against German competitors, especially concerning U.S. tariff exposure.
• Some see the company’s valuation in the premium space as undervalued, suggesting upside potential for investors given recent negative industrial stub valuations. These negative valuations may be considered premature by some analysts.
• Increased price targets to the EUR 130 to 133 range signal confidence in Volkswagen’s execution and recovery capabilities.
• Coverage initiations highlight Volkswagen’s strategic efforts in electric vehicles and global market expansion as positives for future growth.

• Bearish analysts have kept Neutral ratings and offered price targets below recent highs, citing a challenging macroeconomic environment for European automakers.
• Concerns include intensifying competition from Chinese carmakers, which could pressure Volkswagen’s global growth.
• Ongoing uncertainty due to tariffs, currency fluctuations, and tighter EU emission regulations add to execution risk and weigh on the company’s near-term valuation.
• Price target reductions reflect skepticism about rapid improvement, suggesting a cautious approach towards European automotive stocks overall.

What's in the News

• The U.S. Senate Committee plans to scrutinize vehicle-safety mandates in an upcoming hearing. This has raised concerns among automakers about increased regulatory costs (The Wall Street Journal).
• Persistent chip shortages are threatening to halt production across European carmakers, including Volkswagen. This is occurring despite improvements in supply chain agreements with China (The Financial Times).
• Volkswagen has launched development of its first in-house AI chip with Horizon Robotics. The company aims to enhance advanced driving capabilities and regain momentum in the Chinese market (The Financial Times).
• Volkswagen announced that technology co-developed with Rivian could be integrated into combustion engine vehicles, although challenges with software unification persist across its brands (Reuters).
• CEO Oliver Blume confirmed Volkswagen currently has a sufficient chip supply. He stressed, however, that the industry remains vulnerable and called for political solutions to address ongoing semiconductor disruptions (Reuters).

Valuation Changes

• The Fair Value estimate has decreased slightly, from €112.08 to €111.60.
• The Discount Rate remains unchanged at 9.98%.
• The Revenue Growth projection is largely unchanged, remaining at 2.99%.
• The Net Profit Margin estimate has decreased marginally, from 4.50% to 4.49%.
• The forecast for the future P/E ratio has declined slightly, from 4.66x to 4.65x.