Volkswagen Expects 90% Electric Car Sales in 2021; Target Price $159

Volkswagen AG, a German multinational automotive manufacturing company, said on Wednesday that its electric car sales will probably account 90% of total sales in Norway in 2021 and replace polluting petrol and diesel engines by 2023, Reuters reported citing the auto maker’s local importer.

An all-time high 61.5% of new cars sold in Norway in September were powered by fully electric engines, registration data showed, up from 42.4% last year. The debut in September of Volkswagen’s highly anticipated ID.3 model vaulted it to the top of the Norwegian sales ranking, outselling California-based Tesla‘s Model 3 and Geely‘s Polestar 2 from China, according to the Norwegian Road Federation, Reuters reported.

At the time of writing, Volkswagen’s shares traded 1.43% to EUR139.44 on Wednesday; however, the stock is down over 20% so far this year.

Volkswagen stock forecast

Fourteen analysts forecast the average price in 12 months at EUR 159.31 with a high forecast of EUR 190.00 and a low forecast of EUR 135.00. The average price target represents a 15.72% increase from the last price of EUR 137.67. From those 14, nine analysts rated “Buy”, three rated “Hold” and two rated “Sell”, according to Tipranks.

Morgan Stanley target price is EUR 135 with a high of EUR 180 under a bull scenario and EUR 90 under the worst-case scenario. Volkswagen has been assigned a EUR 145 target price by stock analysts at Jefferies Financial Group. The firm presently has a “neutral” rating on the stock.

Other equity analysts also recently updated their stock outlook. Barclays set a EUR 155 price target and gave the company a “buy” rating. Deutsche Bank set a EUR 170 price target and gave the company a “buy” rating. Royal Bank of Canada set a EUR 175 price target and gave the company a “buy” rating. Warburg Research set a EUR 190 price target and gave the company a “buy” rating. At last, Nord/LB set a EUR 135 price objective and gave the company a “neutral” rating.

Analyst view

“Volkswagen (VW) is the No. 1 global auto OEM. Strong positioning, a strong SUV model cycle, and improved cost management have all supported the recent earnings streams. The upside is capped by peak cycle demand, slowing China demand, European cycle risks, and European and global emissions legislation forcing VW to reduce CO2 and accelerate BEV development,” said Harald Hendrikse, equity analyst at Morgan Stanley.

“Volkswagen is the leading BEV legacy OEM -but it remains a very small proportion of sales and capital, with a very large legacy cost base. Ex FY20E, EPS has been near record highs, and VW remains the consensual Buy in the European sector for now. On lower FY20E EPS, valuation is not cheap.”

Upside and Downside risks

Upside: 1) Volkswagen margins and FCF recover more fully in FY21E than we forecast. 2) BEV sales accelerate more sharply in FY21E. 3) Volkswagen’s rating starts to reflect some BEV sustainability as BEV sales accelerate – highlighted by Morgan Stanley.

Downside: 1) Emissions regulations impact through further regulatory fines & or other liabilities. 2) Sharp decline in global demand/pricing could undermine margins more significantly.