HSBC Mercedes-Benz (MBG.GR) - Buy: Margins Lower, but FY26 Guidance Intact
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HSBC maintains its Buy rating on Mercedes-Benz but lowers the target price from EUR 63 to EUR 61 after the company signaled it cannot rule out third-quarter automotive adjusted operating margins falling below the 3-5% full-year guidance range; HSBC models 2.5%. Automotive sales fell roughly 8% year-on-year and 3% quarter-on-quarter, though regions excluding China grew 1%. Second-half earnings are expected to come in below the first half, pressured by weaker Chinese joint-venture volumes, higher raw-material costs and increased depreciation from new product launches. Vans remains a bright spot: sales rose 4%, large vans gained 15%, and third-quarter return on sales stayed within the 8-10% 2026 guidance. Industrial free cash flow is expected to be weak in the third quarter, which includes a EUR 0.6bn inflow from the sale of Daimler Truck shares, before improving in the fourth quarter. Management kept FY2026 guidance unchanged, with fourth-quarter volumes expected to recover on new and refreshed model launches, and the cost-savings program progressing in line with full-year targets.