2024 was not the best year for automobile companies on the Old Continent, given the weakness of their business in China. The sector closed last year in negative territory, and almost all of its firms recorded significant declines in the annual count, except Ferrari and Renault, which they managed to advance in a momentum complicated for sales in the sector. The outlook for this year is not very encouraging either, since analysts expect the declines in profits reported by these companies to continue throughout this year, but Renault starts the year with good foot. The company has the only purchasing advice of all its counterparts, as shown by the algorithm generated by this medium with the consensus of experts gathered by FactSet.
In this way, Renault Starts the year with its best recommendation since September 2018while the rest of the European automotive companies raise maintenance recommendations. Not even Mercedes Benz and Porsche preserve the purchase advice, even though they had managed to resist with this recommendation until the beginning of December.
One of the latest analysis entities that have reviewed the automobile firm is Barclays, after hearing the news that Nissan and Honda had begun to discuss a possible merger, which would make them the third largest automobile manufacturer in the world. From Barclays they highlight that “Renault is a great Nissan shareholder (it currently holds a 36% stake), so a stronger Nissan would be positive for the company, both in terms of direct financial impact on the results (including sales to partners, and the dividend received from Nissan)” .
Furthermore, they point out that it would favor the French company in “terms of value of the participation, which increased by 655 million euros overnight“due to the revaluation of the Japanese company’s shares in November after the merger headlines. Barclays assures that “this is especially significant, given that Renault has committed to reducing its participation at 15%, allocating the proceeds from the sale to strengthening the balance sheet of your company and, by extension, profitability for the shareholder.” The firm concludes that “a fusion Honda-Nissan “would potentially offer Renault a natural exit opportunity to accelerate the sale of its (excess) stake in Nissan.”
And although “the mass market in the European Union remains lukewarm,” Barclays estimates that Renault is “gaining share with its excellent portfolio of products from the Renault and Dacia brands, from our point of view.” Therefore, they have increased the target price they give to the company’s shares by 17% to 52.5 euros, which represents a potential of 12.2% ahead.
From JP Morgan they explain that their commitment to the automotive company “revolves around Renault Auto’s basic margin, the strong cadence of product launches in the next three yearswhich will boost the product mix and its pricing power, the ability to cooperate with Nissan; and the generation of industrial free cash flow.” And, “regardless of a possible merger of Nissan with other partners,” they consider that there are no changes, since “the company clearly benefits from its solid product portfolio, a strong free cash generation and a growing net cash position“, they add.
Porsche has the best rating
Regarding the valuation that experts have of this company, the analyst consensus considers that The French automobile company has 17% potential to explore in the coming monthswhich is equal to the average of companies in this sector. In 2024, Renault advanced up to 28% in its stock price, and now they expect it to advance to 55.84 euros, compared to the around 47.8 euros at which it is listed.
Although this firm has the best recommendation of all the automobile companies, analysts expect that its counterparts, Porsche and Volkswagen, will increase more than 25% on the stock market throughout 2025 after the falls recorded last year. The European luxury brand fell by 21.5% in the stock market throughout the year, since in the first nine months of fiscal year 2024 plummeted by 30% regarding earnings for the year 2023. Experts now expect that Porsche reach 80 euros, which represents a growth of 29% in the coming months from the 61 euros at which it is listed. Meanwhile, the German company lost 20.4%, currently the company’s price is around 91 euros and Analysts expect that in 2025 it will advance 27% moreup to 115 euros.
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