(Corrects typo in headline)
FRANKFURT (dpa-AFX) - Shares in German automakers outperformed a buoyant market on Tuesday. The sector benefited not only from a general easing of tensions across stock exchanges, as the US and Iran consider a further round of talks, but also from positive sentiment generated by pre-close calls from Mercedes and Porsche. These updates on first-quarter developments precede the traditional quiet period before the official release of financial results.
Continental, as an automotive supplier, also saw its shares rise, bolstered by an upgrade to "Overweight" by British bank Barclays. In the current environment, analyst Erwann Dagorne is pivoting toward defensive qualities and pricing power, both of which he believes Conti possesses.
By early afternoon, shares in the tire manufacturer had gained 1.9 percent to 64.82 euros within a firm Dax. Simultaneously, Mercedes-Benz rose 2.0 percent to 55.30 euros, reclaiming its 200-day moving average - a closely watched indicator of long-term trends - a feat also mirrored by Porsche AG.
VW gained 1.7 percent to 89.34 euros, while BMW slipped 0.3 percent to 83.60 euros following weak first-quarter sales figures. In the robust MDax, sports car manufacturer Porsche AG climbed 4.1 percent to 43.20 euros.
Better-than-feared commentary during the calls from Mercedes and Porsche supported not only their own shares but the entire automotive sector, according to one trader. Analysts pointed to encouraging developments in certain divisions of the two carmakers, though they also highlighted details that warrant a more critical perspective.
Barclays analyst Henning Cosman expects a "solid quarter" for Porsche based on the guidance, albeit coming off a weak base. Total revenue is expected to decline less sharply than wholesale business. The expert anticipates first-quarter margins for operating profit (Ebit) and free cash flow to sit at the upper end of the 2026 target ranges, citing the sports car manufacturer's strong model mix as a primary driver of margin resilience.
Jefferies expert Philippe Houchois saw no major surprises but revised his free cash flow estimate upward. Meanwhile, experts at Bernstein and Oddo BHF highlighted the positive margin development but noted that this should be viewed in the context of unusually low realignment costs for the first quarter.
According to Bernstein analyst Stephen Reitman, Porsche's core message concerned group operating profitability. He noted that the operating margin (Ebit) is likely to be at the upper end of the range forecast in March, which would also exceed the Visible Alpha consensus. "However, we note that the strategic realignment costs of approximately 100 million euros forecast by Porsche for the quarter are unusually low compared to the 800 to 900 million euros expected for the 2026 financial year," he wrote. Oddo added that, beyond the product mix, the relatively robust first-quarter profitability was due to the timing of cost allocation.
Analysts also saw a mix of "light and shadow" regarding Mercedes. Overall, the automaker's statements were slightly better than expected, commented Jefferies analyst Philippe Houchois, specifically praising margins in the van business. While he slightly raised his margin forecasts as a result, he remains cautious for the full year due to the Middle East conflict.
Reitman of Bernstein Research spoke of robust cash flow, and Barclays analyst Cosman believes the first quarter will mark the low point of the year 2026 for Mercedes. Conversely, Oddo experts lowered their price target from 43 to 42 euros and reaffirmed their "Underperform" rating. They anticipate a sluggish start to the year for the Mercedes automotive segment in terms of both sales volumes and operating performance, hampered by product transitions. According to them, Mercedes continues to face "significant structural challenges." While the generous payout policy supports the stock, they expressed "doubts about the sustainability of this strategy" given the deteriorating fundamentals.
BMW shares initially suffered from weak first-quarter sales in China and in the electric vehicle segment. Caution also prevails ahead of the upcoming pre-close call. UBS analyst Patrick Hummel recently lowered his price target for BMW, even though the premium manufacturer could surprise positively with its guidance. Jefferies' Houchois also lowered his price target for BMW last week, citing the impact of the Iran conflict, even if these effects are expected to be negligible in the first quarter./ck/men/jha/
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