After strong outperformance of the Auto sector in Europe, GS claims it’s time to take profit on some of the outperformers and downgrades to ‘Sell’ rating the following names: Valeo, Nokian Renkaat, Peugeot and BMW.
« We continue to see significant value in some European automotive names for 2018. With an accommodating global economic outlook easing statistical car cycle risks, we believe the sector is likely to be rediscovered by investors attracted by a combination of: (1) compelling absolute and relative valuations; (2) improving earnings; (3) self-help initiatives; (4) structural value creation optionality; and (5) improving overall sentiment as the automotive industry prepares for the autonomous and electrification challenges and opportunities of the next decade. Our Buys are FCA, Volkswagen and CNHi (all on the Conviction List), as well as Porsche, Daimler, TI Fluid Systems, Michelin and Continental. Our Sells are Valeo, Nokian, PSA and BMW. »