Porsche shares inch up as Citi upgrades stock on strong 2025 outlook
Investing.com -- Porsche 's (ETR:PSHG_p ) stock inched up higher on Wednesday following a favorable shift in its outlook by Citi Research, which upgraded the luxury automaker to “buy” from “neutral.”
This revision reflects growing optimism about Porsche’s future performance despite a challenging 2024, marked by declining demand in China and broader economic headwinds such as high interest rates and sluggish global luxury car markets.
Citi analysts argue that Porsche’s outlook is poised for a turnaround starting in 2025, driven by improved sales volumes and profitability from new model launches.
While the company faced difficulties in the Chinese market—with forecasts showing a drop from 91,000 units in 2022 to 56,000 units in 2024—analysts from Citi said, “Whilst we forecast this to go a further 10k lower in FY25E, we think the FY25E yoy impact will be much smaller than the ~25k unit loss in FY24 off this lower base”.
The Macan SUV, which has seen declining sales in China and Europe, is viewed as a less profitable product, making its reduced volume less of a concern for Porsche's long-term growth.
Porsche’s post-IPO strategy, focusing on brand value and pricing over sheer volume, is expected to yield higher profit margins. This approach contrasts with its prior business model under Volkswagen (ETR:VOWG_p ), which emphasized larger volumes.
Citi projects that new model availability, especially high-end versions of the 911, along with increased personalization options, will bolster the company’s margins. By 2025, Porsche’s EBIT margin is forecast to improve to 15.4%, up from 13.8% in 2024.
Given these factors, Citi revised its price target for Porsche to €85 from €75, citing the company’s potential for stronger earnings growth compared to its European automotive peers.
With Porsche positioned to leverage its brand strength and manage the shift to electric vehicles, Citi’s analysts expressed confidence in a 26% potential upside in the stock, making it a rare bright spot within a subdued European automotive sector.
While risks such as trade tensions with China remain, Citi suggests that Porsche’s decision to prioritize high-margin models and strategic growth will likely lift both profitability and investor sentiment in the coming quarters.
Source: Investing.com
