Skip to main content

Market Overview

Morgan Stanley Says To Sell Auto Cycle Rallies, Fails To Locate Value

Morgan Stanley Says To Sell Auto Cycle Rallies, Fails To Locate Value

Morgan Stanley recommended selling any rally in the auto sector. The firm noted that there is very limited investor appetite for the European or the U.S. auto stocks. The firm believes investors would want to sell any rally triggered by central bank and fiscal support.

Cyclical Risk

Analysts Harald Hendrikse and Victoria Greer sees cyclical and structural technology risk even as European automakers remain confident due to recovering sales in Europe, the resilience of China, limited U.S. exposure and ultra cheap finance. However, according to the analysts, "value is not enough."

Technology Risk

Morgan Stanley believes the conversion of the European OEMs to electric drive creates significant uncertainty. The firm raised several questions, including the cost of developing new powertrains, the price consumers will pay for the proposed EV drive vehicles versus combustion engines, the ability of EVs generating similar margins to existing cars, among others.

Rally-Less Likely

Morgan Stanley highlighted the underperformance of auto stocks in the year-to-date period due to the investors pricing in peak cycle earnings and de-rate, especially the OEMs into the 2017 estimates. The firm sees less scope for a rally on low valuation in the October/November timeframe, given the uncertainty surrounding the central bank decisions, European bank performance, the U.S. election and European risks such as the Italian referendum.

Latest Ratings for RACE

Feb 2021HSBCDowngradesBuyHold
Feb 2021Morgan StanleyMaintainsOverweight
Jan 2021CitigroupDowngradesBuyNeutral

View More Analyst Ratings for RACE
View the Latest Analyst Ratings


Related Articles (RACE)

View Comments and Join the Discussion!

Posted-In: Harald Hendrikse Morgan Stanley Victoria GreerAnalyst Color Long Ideas Short Ideas Analyst Ratings Trading Ideas Best of Benzinga

Latest Ratings

KRYSHC Wainwright & Co.Maintains103.0
OTRKRBC CapitalDowngrades32.0
EVHCanaccord GenuityMaintains24.0
BMRNCanaccord GenuityMaintains91.0
ONTFCanaccord GenuityInitiates Coverage On65.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at