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BMW Recovery: Some Are Optimistic, but Many Remain Skeptical

February 7, 2010
2 min to read


FRANKFURT - BMW AG has forecast a modest rise in car sales this year and confirmed it expected a 2009 pretax profit despite the global economic crisis, Reuters reported.

While some analysts welcome the sales figures for 2009 and see upside to the company's targets, others expect continuing pressure on the company's profit margins and outlook as the car sector remains vulnerable due to the global economic crisis.

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"Revenues have surprised positively. We see our positive case for BMW confirmed," Equinet analyst Tim Schuldt wrote, keeping a "buy" rating on the stock.

BMW said its 2009 sales came in at 50.68 billion euros ($71.15 billion), exceeding the DZ Bank estimate of 48.35 billion euros.

Analysts at Citigroup also keep a "buy" rating on BMW. They argued that the launch of the new 5-series medium-premium sedan in 2010 could add positive momentum to the current consensus for revenue growth of 5 percent.

DZ Bank analyst Michael Punzet remains skeptical on the company despite revenue coming in above his expectations, keeping a "sell" rating on the stock.

"Without any more details, especially on sales and earnings division break down we see no reason to change our skeptical view on premium manufacturers and therefore confirm our sell recommendation on BMW," Punzet wrote.

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Analysts at Exane BNP Paribas also remain cautious on the stock, hiking their price target but sticking to their "underperform" rating.

"We remain skeptical about the aggressive 2012 group margin target," the Exane analysts wrote.

BMW aims to achieve an earnings before interest and taxes (EBIT) margin of 8 percent to 10 percent in the automobile segment by 2012.

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