Analyst Note| Richard Hilgert |
Mercedes-Benz updated investors on its passenger vehicle strategy, raising its adjusted EBIT margin objective by reducing entry-level premium offerings and increasing its focus on top-end luxury models. We like the strategic direction the firm is taking, capitalizing more so on the Mercedes-Benz luxury brand image. Changes to our model to reflect an enhanced margin profile resulted in our new EUR 91 fair value estimate, up from the previous EUR 80. The 4-star rated stock of Mercedes-Benz trades at an attractive 31% discount to our new fair value.