Is it time to take a contrary view on car makers? Analysts at Deutsche Bank believe so, though investors might need a thick skin.
“Automotive stocks are having a hard time globally. Unfortunately, we believe the industry is likely to head into another year of volatility and headwinds across regions.
“We expect more noise of potential policy implications in the US, further restructuring announcements in Europe, muted demand ex China and pricing to soften. So why even bother to look at the space?” Deutsche asked.
Answering its own question, the bank says choosing carefully can still deliver decent returns, both relative and absolute.
“Renault, for example, would have generated 18% absolute and 33% outperforming year to date”.
With that in mind, it had upgraded US parts group Dana to a buy with a US$19 target price, while remaining a buyer of Porsche AG (ETR:P911) and Porsche SE, though targets on both were reduced to €80 from €85 and €55 from €70 respectively.