On Tuesday, Bernstein SocGen Group revised its price target for Volkswagen AG (VOW:GR) (OTC: OTC:VWAGY) shares, reducing it to EUR111.00 from the previous EUR136.00, while keeping a Market Perform rating on the stock.
The adjustment follows Volkswagen (ETR:VOWG_p)'s recent lowering of its 2024 guidance over the past month, which set the stage for the earnings report released on August 1, 2024.
Volkswagen confirmed expectations to finish the year at the lower end of its updated operating margin guidance range of 6.5-7.0%, a revision made on July 10, 2024, from the earlier forecast of 7.0-7.5%. The company's CEO, Olivier Blume, emphasized a rigorous focus on cost management, which remains a top priority for the board.
To bolster sales in the second half of 2024, Blume highlighted the planned launch of 30 new products, half of which are battery electric vehicles (BEVs).
These launches are anticipated to mitigate the inventory build-up experienced in the first half of 2024 and to continue the positive trend in automotive free cash flow observed in the second quarter of 2024.
Despite Volkswagen's significant investments in BEVs and numerous product launches, the automaker is yet to achieve the sales volume necessary to meet the stringent 2025 CO2 emissions targets in Europe.
The analyst noted that increasing BEV sales remains imperative for Volkswagen, although the high costs associated with batteries present a challenge to profit margins.
InvestingPro Insights
As Volkswagen AG (OTC: VWAGY) navigates through updated guidance and strategic product launches, insights from InvestingPro provide a clearer financial picture for investors. With a Price/Earnings (P/E) ratio of 3.45 and an even lower adjusted P/E ratio for the last twelve months as of Q2 2024 at 3.15, VWAGY is trading at a low earnings multiple, suggesting potential value for investors. The company's commitment to dividend payments, having maintained them for 33 consecutive years, coupled with a significant dividend yield of 5.66%, continues to reward shareholders despite market challenges.
The firm's Price/Book ratio as of Q2 2024 stands at a mere 0.28, indicating that the stock may be undervalued relative to the company's book value. This could be an attractive entry point for value investors, especially considering VWAGY's status as a prominent player in the Automobiles industry. However, two analysts have revised their earnings downwards for the upcoming period, which should be taken into account when assessing the company's future performance.
For investors seeking more comprehensive analysis, InvestingPro offers additional tips on VWAGY, which can be accessed for deeper insights into the company's financial health and market position. There are currently 11 more InvestingPro Tips available, providing a multifaceted view of Volkswagen's investment potential.
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