Volvo Cars (Sell, TP: SEK33.00) - Roadblocks ahead
We have downgraded Volvo Cars to SELL (HOLD) and cut our target price to SEK33 (44) as we believe consensus looks too bullish on 2024–2025e gross margins and cash flow in light of intense price competition and the negative mix impact from BEVs. Risks and challenges are plentiful, including limited free float (Volvo Cars c17%; Polestar c4–5%), Polestar’s financing needs, and significant investment for Volvo Cars in the coming years.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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