BMW: RBC lowers target price

(CercleFinance.com) - RBC on Wednesday reiterated its 'sector perform' rating on BMW shares, while lowering its target price for them from E106 to E98.


The Canadian broker is confident in the German automotive group's ability to generate an EBIT margin of 9.4% for its automotive activities in H2, compared with 8.6% in H1, with a view to achieving its annual target of between 8% and 10%.

RBC justifies its optimism by the strength of the automaker's order book and the recent launch of several models, including the latest 5 Series, the Mini in China, the new M line and the GKL (Grande Klasse Luxury) range.

The broker nevertheless points out that the remuneration it offers its shareholders is lower than that of Mercedes, its closest peer, a factor which, in its view, is behind the underperformance of its shares.

The Mercedes-Benz Group share has in fact outperformed BMW by 19% this year, it points out in its note.

In the US, however, the stockmarket performance of GM, whose capital redistribution policy is aggressive, has outperformed that of Ford by 49% since 1 January, a gap that shows just how much American investors value return on capital compared with their European counterparts.


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