Fri Sep 20 07:42:45 UTC 2024: ## Mercedes-Benz Cuts 2024 Outlook Despite Morgan Stanley’s Confidence

**FRANKFURT, GERMANY** – Despite maintaining an Overweight rating and €82.00 price target, Morgan Stanley acknowledged Mercedes-Benz’s revised downward outlook for fiscal year 2024. The automaker lowered its Return on Sales (RoS) expectations for its Cars division to 7.5-8.5%, a significant decrease from the previous forecast of 10-11%.

This adjustment implies a margin of around 6% for the second half of 2024, impacting the overall earnings before interest and taxes (EBIT). While the company’s projections for Vans and Mobility divisions remain unchanged, Mercedes-Benz now anticipates a year-over-year EBIT decline of more than 15%, a stark contrast to the earlier expectation of a slightly below outcome.

The revised outlook also includes a significant reduction in industrial free cash flow (FCF), with a projected year-over-year decrease of over 25%. These revisions could lead to a substantial decrease in consensus group EBIT estimates, potentially reaching a 20% reduction due to factors like weaker product mix and dynamic pricing.

Despite the gloomy forecast, Morgan Stanley remains optimistic about Mercedes-Benz’s long-term prospects. The investment bank attributed the downward revision to factors like market volatility and macroeconomic pressures, and believes that the company will eventually overcome these challenges.

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