On Tuesday, HSBC adjusted its price target for Porsche AG (ETR:P911_p) (P911:GR), now aiming for EUR95.00, a decrease from the previous EUR105.00, while continuing to endorse the stock with a Buy rating. The firm's stance remains optimistic on Porsche AG's prospects, anticipating potential earning surprises as the company rolls out new models.
The rationale behind the price target revision is to align with lowered estimates, as stated by the firm. HSBC employs a hybrid valuation approach that combines a sum-of-the-parts method based on multiples and a Discounted Cash Flow (DCF) analysis. Even with the revised price target, HSBC believes there is approximately a 14% upside potential for Porsche AG shares.
HSBC's confidence in maintaining a Buy rating is fueled by the expectation that Porsche AG's new models will resonate positively in the market, potentially leading to favorable earnings results. The firm's analysts are keeping an eye on the luxury automaker's ability to surprise the market positively with its performance.
However, HSBC also acknowledges risks that could impact its outlook. These risks include a potential downturn in luxury demand due to macroeconomic factors and execution challenges that Porsche AG might face amid the launch of a significant number of new models.
The lowered price target to EUR95.00 from EUR105.00 reflects these considerations, with HSBC balancing its optimism for Porsche AG's future with a cautious recognition of the risks present in the current economic environment.
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