D.he premium manufacturer wants to go green and has set itself the goal of being completely CO2-neutral by 2039. In this context, electric vehicles should already account for more than 50 percent of sales by 2030, while the stock of combustion models should be reduced by 70 percent in the same period.
With this reorientation, Daimler does not only want to transform itself into a green auto group. The goal is also to finally present long-term economic key figures that will please institutional investors and small shareholders. The DAX group is aiming for an increasing return on sales by 2025. “The company’s aim is to achieve double-digit returns in a strong market environment,” said Daimler CEO Ola Källenius on Tuesday.
Lower costs, increase margins
Daimler as the new world-leading electric car manufacturer? That sounds tempting, and anyone who has been a shareholder of the traditional car company for many years will perhaps look a bit at the share price of the American electric car manufacturer Tesla and secretly hope that the Dax group with its future model range will in the recently somewhat faded Daimler star Untertürkheim can shine again.
Not everyone is happy with the new plans. One day after the presentation, the head of the car manufacturer’s general works council, Michael Brecht, warned his employer against focusing solely on electromobility. You shouldn’t put everything on this card, said Brecht in an interview. “The overall climate balance is important, not the type of drive. Anyone planning without a combustion engine slaps all those colleagues in the face who have been doing an excellent job in these areas for decades and are further improving this technology. “
The statements are very easy to understand on the part of the top employee representative. Because the change to the electric car company will go hand in hand with the shedding of thousands of jobs at Daimler. Up to 15,000 jobs could be affected, it was said last. According to Brecht, however, the personnel costs make up less than 15 percent of the total costs, so the company would have to come up with more “than just knocking the personnel costs out of our heads every time,” said the head of the general works council.
Better late than never
The new direction of the Daimler group certainly deserves the critical subtitle “Better late than never.” In the past, investors have accused the group of having missed important decisions for the switch to e-mobility. The current crisis is not only related to Corona, but is homemade.
Daimler now seems to be switching the switch. It was high time. In the next year, the new carbon dioxide limits will come into force, which every automaker must comply with with the cars it sells. So the company had to react.
Despite all the criticism from employees, many will like the new green corporate orientation. Among other things, the investors who invested in Daimler papers this spring when the company initially delivered a meager balance sheet for 2019 and then the share price fell even further due to the corona pandemic.
On the part of the analysts, at least at this point in time, there are only a few who recommend selling the share. Goldman Sachs is one of the skeptics. The analysis house sees a price target of 40 euros at Daimler. In contrast, many other auto stock experts have found the Daimler strategy to be good.
The analysis company Jefferies recommends buying with a price target of 53 euros. Reducing fixed costs, investments and the budget for research and development by 20 percent is a “big deal” and a message that investors should take seriously, according to the assessment. Bernstein Research, in turn, sees the price target at 60 euros, a JP Morgan analyst even spoke of the “most profound” capital market event in the past ten years and left Daimler shares at “Overweight” with a price target of 54 euros.
Investors who like to consult the technical chart analysis will now see one thing in the Daimler share in October 2020: an intact long-term upward trend after the paper had previously experienced a decline that lasted more than two years. Between January 2018 and March 2020, prices plummeted by more than 70 percent and in mid-March of this year they marked the lowest price since the crisis year 2009 at EUR 21.
From this price floor there was a steep race to catch up, in the course of which, at the beginning of August, the 200-day line was regained and thus the change to the overall upward trend. In the following weeks, the share price continued to rise.
This week the Daimler share marked new eight-month highs in the area of the 49 euro mark. In terms of the chart, the way is now clear to the high of 54.50 euros from November 2019. The next stage goal would then be the 2019 year high from last April at 60 euros. Based on the current price level, there is a further profit potential of 25 percent over the coming months.