Renault: stock falls on broker downgrade

(CercleFinance.com) - Renault shares are down sharply on Friday in the wake of far from optimistic comments from UBS, which predicted a "hard landing" for the automotive group.


In its morning comments, the Swiss bank's analysts expressed concern about the growing competition from Chinese car makers, as well as Tesla.

With around 70% of its sales in Europe and a 10% market share on the continent, Renault is one of the most vulnerable players, it notes.

The Swiss bank also doubts whether the planned IPO of the group's electric vehicle and software subsidiary, Ampere, scheduled for H1 2024, will create much value for shareholders.

Finally, UBS notes that the Group's residual business ("stub") - i.e., the perimeter remaining after Ampere's spin-off - stands at around E16, well above its 5- and 20-year averages.

As a result, the bank has downgraded the stock to "sell" from "neutral", having slashed its corresponding target price from E42 to E31.

Following these comments, Renault shares were down by over 4% at around 10:30 a.m., underperforming an also negative STOXX automotive index (-1.4%), with UBS also downgrading its Volkswagen shares.


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