On Friday, Morgan Stanley reaffirmed its confidence in Bayerische Motoren Werke AG (BMW (ETR:BMWG):GR) (OTC:BMWYY (OTC:BMWKY)), sustaining an Overweight stock rating and a price target of EUR85.00. The research firm highlighted BMW’s robust financial position, noting the company’s substantial cash reserves and profit margins comparable to those of Mercedes. Despite these strengths, Morgan Stanley anticipates more modest shareholder returns from BMW, projecting a 7% return in 2025.
The analysis by Morgan Stanley acknowledges BMW’s similar market exposure to the United States as Mercedes, with added operational flexibility to shift production domestically in response to sustained high tariffs. However, BMW faces challenges due to tariffs affecting its exports to China from the U.S. These trade barriers are expected to exert additional pressure on the company’s profit margins in 2025 as it strives to expand its electric vehicle (EV) offerings and competes in the market with incentives and rebates to maintain sales volumes.
As BMW gears up for the launch of its Neue Klasse models, the company is anticipated to continue investing heavily in the EV segment. Despite these investments and the associated margin pressures, Morgan Stanley notes that BMW’s stock continues to trade at a premium compared to Mercedes, a trend consistent with historical patterns. The investment firm’s analysis suggests that while BMW is working to increase its presence in the EV market, it is also navigating the complexities of international trade tariffs that could impact its profitability.
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