LIVE MARKETS-Citi on EU autos: 'No sector is ever uninvestable'
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CITI ON EU AUTOS: 'NO SECTOR IS EVER UNINVESTABLE'
After two warnings from Porsche and Volkswagen, investors remain wary about European autos .SXAP, one of the worst-performing sectors this year, with an over 5% slide.
No surprise then that the single key question coming up during a Citi marketing trip over in the U.S. was: "is the (EU) auto sector investable?"
Analyst Harald Hendrikse at the Wall St bank is not entirely downbeat. "No sector is ever 'uninvestable'," he says, "But the real question is how to invest in them".
And here comes the tricky part.
OEM 2025 EBIT forecasts have plunged to below 35 billion euros ($41.12 billion) from 96 billion in 2023, reflecting structural challenges from Chinese competition and regulation.
Still, some names show promise. VW's restructuring and China strategy are gaining traction, and Porsche's brand strength could attract buyers, once momentum builds. Ferrari's investor day on Oct. 9 is drawing attention, though Hendrikse's contrarian sell rating warns of high expectations.
Stellantis has drawn little interest despite the rally in its shares. BMW and Mercedes remain "funding shorts" amid concerns over China margins.
Overall, Hendrikse sees potential for a recovery going into 2026, driven by laggard chasing and tariff clarity - but how long it lasts is another story.
(Danilo Masoni)
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EARLIER ON LIVE MARKETS:
EUROPEAN SHARES SOFT, REMAIN IN NARROW RANGE CLICK HERE
EUROPE BEFORE THE BELL: FUTURES STEADY, MARKETS AWAIT CATALYST CLICK HERE
STOCKS TAKE A BREATHER CLICK HERE
($1 = 0.8511 euros)
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