BMW initiated with a Buy at Redburn Atlantic

Redburn Atlantic initiated coverage of BMW with a Buy rating and EUR 120 price target. The analyst launched coverage of nine automotive original equipment manufacturers, with a “cautious bias” driven by falling incremental returns. Margins face fading support, which had been provided by a resilient consumer and vehicle undersupply, the analyst tells investors in a research note. Redburn expects the winners to iterate best-in-class electric vehicle platforms and scale desirable models to support high utilization at lower unit costs. Its preferred names are BMW and Stellantis. Tesla has largely retained its technical leadership in electrical architectures, offering scale advantages and lower unit costs, says the firm. However, its valuation “appears indifferent to margin pressure from pricing and rising capital needs,” adds Redburn. The firm rates it Sell, alongside Volkswagen and Ford, where it also detects electric vehicle challenges.