Please ensure Javascript is enabled for purposes of website accessibility

Why Volkswagen Stock Is Still Surging

By John Rosevear - Mar 22, 2021 at 10:54AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Wall Street is growing more bullish on VW's electric vehicle plan.

What happened

Shares of German auto giant Volkswagen (VWAGY -0.61%) were trading sharply higher on Monday morning, after a Wall Street analyst raised his bank's price target for the stock on a bullish view of the company's electric car plans.

As of 10:15 a.m. EDT, VW's American depositary shares were up about 10.5% from Friday's closing price.

So what

In a new note on Monday, Deutsche Bank analyst Tim Rokossa raised his price target on Volkswagen's Frankfurt-traded ordinary shares to 270 euros, from 185 euros, while maintaining a buy rating on the stock.

Noting that Volkswagen now aims to sell 1 million electrified vehicles in 2021, the majority of which will be pure battery-electric vehicles (BEVs), Rokossa wrote that Volkswagen's full-year BEV sales total will likely be "very close to Tesla's (TSLA -6.42%) BEV sales." 

The analyst went on to say that the with the global launch of the new VW ID.4 electric SUV now under way, there's a "good chance that VW could surpass Tesla's BEV sales as soon as next year," which in his view should increase the value that investors put on the company's electric vehicle strategy. 

A blue Volkswagen ID.4, a compact electric crossover SUV.

VW said that European deliveries of its new ID.4 electric crossover will begin before the end of March. Deliveries in the U.S. and China will follow later this spring. Image source: Volkswagen AG.

In what he called a "blue-sky scenario," Rokossa noted that if Volkswagen's electric-vehicle effort were valued as a separate company, using the price-to-sales multiples of successful pure-play BEV companies like Tesla or NIO, Volkswagen's mass-market electric vehicle platform would yield a value of almost 400 euros per share -- before even taking into account the premium electric vehicle efforts at VW subsidiaries Audi and Porsche. 

Now what

Rokossa acknowledged that Volkswagen's share price could face some headwinds, including the possibilities of further weakness in the euro and a slowdown in China's premium vehicle market. But the potential price upside "more than compensates" for those concerns, he wrote.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Volkswagen Aktiengesellschaft Stock Quote
Volkswagen Aktiengesellschaft
VWAGY
$19.58 (-0.61%) $0.12
Tesla, Inc. Stock Quote
Tesla, Inc.
TSLA
$663.90 (-6.42%) $-45.52
Nio Inc. Stock Quote
Nio Inc.
NIO
$16.44 (-1.32%) $0.22

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
330%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/23/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.