Volkswagen: HSBC sees problems, maintains 'hold' recommendation
(CercleFinance.com) - On Tuesday, HSBC reiterated its 'hold' recommendation and price target of 108 euros on Volkswagen shares, while noting that the automaker would have to adapt to a 'new reality'.
In a research note, the British broker recalls that, in 2019, the German giant had concluded a long-term agreement with its trade unions guaranteeing continued employment until 2029.
But while the group was still selling 3.9 million vehicles in Europe alone at the time, this figure is set to fall to 3.4 million units this year, according to the broker's calculations.
From the broker's point of view, the outlook for VW - and for the market as a whole - is therefore bleak, with average annual growth likely to be zero between 2025 and 2030, it worries.
This is worrying, adds HSBC, given that other groups such as Renault and Stellantis have already adapted to the situation by cutting between 15% and 20% of their jobs in recent years, unlike VW.
During the same period, the German automaker's workforce in Europe has shrunk by just 1%, he points out.
While acknowledging that the stock's valuation is cheap, at just four times earnings, a 35% discount to its historical average, the broker stresses that VW is currently facing a number of problems.
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The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.
The information and analyses published by Cercle Finance are intended solely as a decision-making aid for investors. Cercle Finance cannot be held responsible, directly or indirectly, for the use of information and analyses by readers. Uninformed investors are advised to consult a professional advisor before investing. This information does not constitute an invitation to sell or a solicitation to buy.
In a research note, the British broker recalls that, in 2019, the German giant had concluded a long-term agreement with its trade unions guaranteeing continued employment until 2029.
But while the group was still selling 3.9 million vehicles in Europe alone at the time, this figure is set to fall to 3.4 million units this year, according to the broker's calculations.
From the broker's point of view, the outlook for VW - and for the market as a whole - is therefore bleak, with average annual growth likely to be zero between 2025 and 2030, it worries.
This is worrying, adds HSBC, given that other groups such as Renault and Stellantis have already adapted to the situation by cutting between 15% and 20% of their jobs in recent years, unlike VW.
During the same period, the German automaker's workforce in Europe has shrunk by just 1%, he points out.
While acknowledging that the stock's valuation is cheap, at just four times earnings, a 35% discount to its historical average, the broker stresses that VW is currently facing a number of problems.
Copyright (c) 2024 CercleFinance.com. All rights reserved.
The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.
The information and analyses published by Cercle Finance are intended solely as a decision-making aid for investors. Cercle Finance cannot be held responsible, directly or indirectly, for the use of information and analyses by readers. Uninformed investors are advised to consult a professional advisor before investing. This information does not constitute an invitation to sell or a solicitation to buy.