Mercedes-Benz (DDAIF) stock forecast: will it hold in the EV race?
It’s been tough for automobile manufacturers to navigate semiconductor supply problems due to the pandemic, while labour shortages and protocols kept operations tight across the factory floor. Mercedes-Benz (DDAIF) has been boosted by robust financial management, accelerated strategy implementation, especially across the electric vehicle (EV) and automated driving space, and establishing a new company structure.
While the DDAIF stock is trading nearly 17% lower so far this year, below a Mercedes historical stock price, it has rebounded from its pandemic low of 15 March 2020. However, growth has been hit by Russia’s invasion of Ukraine.
What’s the fate for the auto industry, and will Mercedes return value to shareholders? Let’s look at a Mercedes-Benz stock price prediction for 2022 and beyond.
Mercedes-Benz Group AG, formerly known as Daimler AG, is a company well known for its portfolio of luxury cars and vans. Based in Stuttgart, Germany, the brand’s passenger car range comprises Mercedes-AMG, Mercedes-Maybach and Mercedes-EQ and vans under the Mercedes-Benz and Freightliner brands.
Along with manufacturing premium cars, vans and vehicle spare parts and accessories, the company provides financing and leasing packages for its customers and dealers. The Mercedes-Benz Mobility AG offers financing, leasing, car subscriptions and car rental, fleet management, insurance brokerage and various other innovative mobility services.
The company restructured in the fourth-quarter of 2021. Mercedes-Benz Cars & Vans, Daimler Mobility, Daimler Trucks & Buses and Reconciliation were reorganised and streamlined into three new divisions, namely Mercedes-Benz Cars & Vans, Mercedes-Benz Mobility and Reconciliation (which now includes Daimler Trucks & Buses).
Mercedes stock news
Mercedes successfully completed its historic restructuring by executing a spin-off of its truck arm in October 2021. The new Daimler Truck Holding AG was listed on the Frankfurt Stock Exchange on 10 December 2021. Existing investors hold a 65% stake in the entity, while the parent company retains a 35% stake in Daimler Truck. The restructuring is intended to help Mercedes increase appeal as an electric and luxury car business.
While the restructuring and discontinuation of IB Daimler Trucks & Buses headlined Mercedes stock news, the company’s initiative to modernise and adopt ongoing trends kept it on investors’ radars. Mercedes has taken up several initiatives to help the 135-year-old company take on competitors like Tesla in selling electric vehicles (EV).
At the end of 2021, Mercedes and Stellantis signed a deal with solid-state battery maker Factorial Energy. The strategic alliance gave the automakers rights to commercialise the latter’s battery technology. Heightening climate concerns are constantly pushing automakers to offer green transportation solutions. And with Mercedes pledged to stop making fossil fuel vehicles by 2035 in key markets and by 2040 globally, it’s gradually achieving carbon-neutrality goals in a sustainable manner. Earlier last year, Mercedes acquired a 33% equity stake in battery cell manufacturer Automotive Cells Company, which is a joint venture set up by Stellantis and TotalEnergies.
Throughout the last year, Mercedes has been flooding the market with announcements of new battery-powered vehicles. The EQS is the automaker’s six-figure flagship product followed by the Mercedes-AMG EQE, a sportier version of the car developed by its performance division. Slated for sale in 2023, the model is anticipated to have the potential to win back some of the lost ground from Tesla.
However, Mercedes’ growth momentum is slowing due to the ongoing Russia-Ukraine crisis. It’s likely that the war will trigger a second round of global semiconductor shortages as both countries are key suppliers of the raw materials required for global chip production. Ukraine is home to 70% of the world’s neon output, and neon gas is a major byproduct of steel manufacturing in Russia. Additionally, Russia provides more than 33% of the world's palladium, a key commodity used for chip manufacture.
As automakers are reassessing the unrest, automakers like Volkswagen and Mercedes have suspended shipments to Russia. The Daimler Truck division announced freezing its business activities in Russia with immediate effect, which also includes its collaboration with local truck maker Kamaz. The Group is also contemplating legal options to divest its 15% stake in Kamaz.
Looking at a Mercedes stock analysis, as of 9 March 2022, DDAIF is trading at €59.49 ($65.29) on the XETRA. Given the Mercedes stock market trend, analysts offering 12-month price targets for DDAIF in the last 3 months at Nasdaq predicted an average price target of $100.54.
[Please design: DDAIF 5-year stock price chart]
Financial analysis: What does the annual report show?
Mercedes stock value is affected by product announcements, acquisitions and earning reports. A good product mix, solid net pricing, continued cost-discipline and favourable performance in the used car segment has lifted the adjusted Return on Sales (RoS) for the Mercedes-Benz Cars & Vans division to 12.7% in fiscal year 2021, ending December 31. According to the company’s annual report, revenue per unit has improved by 26% to an average of €49,800 per vehicle, since fixed costs at Mercedes-Benz Cars have fallen by 16% from 2019.
In 2021, Mercedes ticked off several technological milestones. It introduced four battery EVs and attained the first internationally valid system approval for SAE-Level 3 automated driving. In the fourth quarter, Mercedes realised a one-time group earning before interest and tax (EBIT) gain of €9.2bn from the deconsolidation, with no impact on the cash flow and no material impact on taxes.
Annual revenue for 2021 came in at €168bn, an increase from €154.3bn in 2020, while net profit was €23.4bn. Earnings per share, which excluded the deconsolidation result, rose by 280% to €12.89.
Mercedes-Benz Group has promised to take up sustainability and attain net-zero emissions. It’s expanded its research and development expenditure, amounting to €7.7bn.
On the sales side, the top-end vehicles group that includes the Mercedes Maybach, Mercedes-AMG, G-Class, S-Class, GLS and EQS, posted a new sales record in 2021. However, overall sales in the Mercedes-Benz Cars & Vans division decreased by 5% to 2.3 million vehicles. The global semiconductors supply constraints affected sales of Mercedes-Benz passenger cars, bringing down unit sales to 2.05 million.
Mercedes share price forecast: What are analysts saying?
A plausible Mercedes stock future price can be forecast through the analysis of popular technical indicators. The company has a current ratio of 1.2958 and an operating margin of 0.1514. With a market cap of $67.34bn and an opportunity to evolve and capture the EV market, Mercedes can be considered a ‘buy’. Analyst predictions from Zacks Investment Research recommended Mercedes as a ‘strong buy’ stock.
Looking at the Mercedes stock price target, at the time of writing on 9 March, MarketBeat stated that Mercedes had a Beta of 1.4, while 14 analysts rated DDAIF a ‘buy’ stock with a 12-month target price of $90.13. Analysts from Credit Suisse Group, Oddo Bhf, BNP Paribas and Sanford C. Bernstein expected the stock to outperform, while HSBC, AlphaValue, Royal Bank of Canada, UBS Group, The Goldman Sachs Group and Bank of America rated the stock a ‘buy’.
Wallet Investor predicted that Mercedes had long-term earning potential of 10.27% in one year. For the end of the current year, the share price was expected to reach at least $68.872. In 2023, 2024 and 2025, Mercedes stock was forecast to reach a minimum of $76.345, $83.830, $91.312, respectively. The analyst does not provide a forecast for 2030 but estimates prices to reach $100.119 by 2027.
It’s important to keep in mind that price predictions are based on algorithms that consider a stock’s past performance and historical data. They can be wrong. Investors should be aware of macroeconomic scenarios. Predictions can be undone by market dynamics, geopolitician factors and the company’s production and service portfolio expansion.
Always do your own research before investing. Remember that the decision to trade depends on the attitude to risk, your expertise in the market, the spread of your investment portfolio, and how comfortable you feel about losing money should always be considered. Past performance is no guarantee for future success. And never invest more than you can afford to lose.
FAQs
Is Mercedes stock a good buy?
DDAIF has received a consensus rating of ‘buy’ from analysts MarketBeat and Zacks. However, these ratings and predictions are based on algorithms that consider past performance and historical data. They can be wrong. You should always do your own research before investing.
Why has Mercedes stock price been going down?
Mercedes was climbing out of its pandemic-led slump. But recent geopolitical tensions have led the stock to slide. While analysts forecast the stock to rise, automakers and investors are reassessing the Russia-Ukraine crisis that could trigger a second round of global semiconductor shortages.
Will Mercedes stock go up?
According to Wallet Investor and MarketBeat forecasts, at the time of writing (9 March), Mercedes was poised to grow. Given the company’s successful restructuring and portfolio of EVs, investors can be optimistic. However, analysts’ predictions can be wrong and have been inaccurate in the past. Investors should always research before investing.
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