Berenberg raises Volkswagen stock price target to EUR113 on cost cuts

Berenberg has raised its price target on Volkswagen AG (ETR:VOW) to EUR113.00 from EUR112.00, maintaining a Buy rating, citing the automaker's effective fixed-cost reductions and improved production efficiency that are visibly supporting core brand margins. The firm noted Volkswagen's strong product momentum helps it navigate competitive pressures, particularly in Europe. Despite tangible execution risks and broader auto sector uncertainty, the stock trades at an attractive 4.8x 2026E P/E, representing a 25% discount to its 10-year average, suggesting potential value.

Analysis

Berenberg has reiterated its 'Buy' rating on Volkswagen AG (VOW) and marginally increased its price target to EUR113.00 from EUR112.00. The firm's positive stance is underpinned by Volkswagen's implementation of fixed-cost reductions and measures to improve production efficiency, which are now yielding visible support for margins at its core brands. Despite acknowledging 'tangible execution risks' associated with these restructuring efforts, Berenberg highlights that Volkswagen's strong product momentum provides a competitive advantage, particularly within the European market. The valuation appears compelling, with the stock trading at an estimated 4.8x P/E for 2026, a significant 25% discount to its 10-year historical average of 6.4x. This suggests potential for valuation uplift, even amidst ongoing uncertainty in the broader automotive sector.

Key Decisions for Investors

• Investors may consider the current valuation attractive, as Volkswagen trades at a 25% discount to its 10-year average P/E while showing fundamental margin improvement from cost-cutting.
• It is crucial to monitor the execution of the company's efficiency programs, as their success is a key driver of the bull case but also presents the primary risk highlighted by the analyst.
• For those invested in the European auto sector, Volkswagen could be viewed as a relatively stronger position given its product momentum is reportedly allowing it to outperform peers in a competitive environment.