Berenberg reiterates Buy rating on BMW stock amid tariff challenges

Berenberg has reiterated a Buy rating on Bayerische Motoren Werke AG (BMW) with a EUR93.00 price target, acknowledging short-term Q3/Q4 earnings pressure from delayed US/EU tariff reductions and challenging Chinese market conditions. Despite these headwinds, the firm asserts BMW is fundamentally stronger than peers, trades at a discount (7x 2026 P/E) despite higher margins, and holds a material lead in navigating the margin-dilutive BEV cycle, having already passed its peak R&D and capital expenditure for this transition.

Analysis

Berenberg has reaffirmed its 'Buy' rating on Bayerische Motoren Werke AG with a price target of EUR93.00, signaling confidence in the company's long-term fundamentals despite near-term challenges. The firm anticipates earnings pressure for BMW in the third and fourth quarters, stemming from the delayed implementation of reduced 15% US/EU duties—leaving the current 27.5% rate in place—and persistent difficult conditions in the Chinese market. However, Berenberg's core thesis is that BMW is fundamentally stronger than its direct peers, citing its material lead in managing the margin-dilutive transition to battery electric vehicles (BEVs). A key supporting factor is that BMW has already passed its peak R&D and capital expenditure for the current investment cycle, a milestone most competitors have yet to reach. The analysis also highlights a valuation discrepancy, noting that BMW trades at a discount to Mercedes-Benz at approximately 7x 2026 P/E, despite delivering superior margins, suggesting a premium would be more appropriate.

Key Decisions for Investors

• Long-term investors may consider the current valuation at 7x 2026 P/E an attractive entry point, given the company's fundamental lead in the BEV transition and having passed its peak capital expenditure cycle.
• Investors should anticipate potential share price volatility and earnings pressure in the second half of the year due to the identified headwinds from tariffs and the Chinese market.
• It is prudent to monitor geopolitical trade developments regarding US/EU tariffs and BMW's sales performance in China, as these are the primary near-term risks to the outlook.