5 key automobile shares to purchase or keep away from for 2025: BofA

Investing.com — BofA Securities says European automakers in 2025 could be navigating worth pressures, regulatory hurdles and face competitors from Tesla (NASDAQ:TSLA) and Chinese language rivals.

Whereas legacy automakers face margin dangers, choose auto suppliers and some OEMs provide engaging alternatives, the agency stated in a word.

Brokerage listed conviction calls on the next shares, with “purchase” ranking on them –

Continental: The agency recommends Continental, citing potential worth unlock from its deliberate automotive spinoff, restructuring-driven value financial savings, and semiconductor tailwinds anticipated to spice up development in 2025-26.

Valeo (EPA:VLOF): Decrease capital expenditures, value financial savings, and extra worthwhile contracts place Valeo for important EBIT and EPS development. BofA additionally sees room for an earnings or steering shock given low market expectations.

Pirelli: With robust visibility on excessive single-digit earnings development, Pirelli is well-positioned within the difficult auto sector. The decision of its Chinese language shareholder overhang may additional re-rate the inventory.

Stellantis (NYSE:STLA): After a transitional 2024, Stellantis is anticipated to rebound strongly in 2025, aided by higher fixed-cost absorption and minimal affect from stricter CO2 laws. Investor confidence may develop if Chairman John Elkann appoints a brand new CEO.

Whereas BofA downgraded Mercedes-Benz (OTC:MBGAF) to “Underperform,” citing a weak mannequin cycle and a tough 2025 marked by a transition to its MB.EA platform. The agency expects challenges to persist till 2026.

Automakers face headwinds from stricter EU emissions targets, which may weigh on margins except delayed laws present aid.

Nonetheless, suppliers seem higher positioned, benefiting from restructuring and decrease enter prices regardless of near-term dangers akin to a possible Volkswagen (ETR:VOWG_p) strike in early 2025.