Volkswagen Shares Fall 2.5% After Citi Cut

Volkswagen Shares Fall 2.5% After Citi Cut

Volkswagen AG shares declined 2.5% following Citi's downgrade of the automaker's financial outlook. Citi lowered the price target to €94 per share from the previous €110 target while retaining a Buy rating, citing accelerating sales declines in China and mounting structural challenges.

The investment bank reduced its earnings‑per‑share (EPS) forecasts by 18% for fiscal year 2026, by 16% for 2027 and by 7% for 2028, reflecting expectations of reduced volumes and tighter profit margins. Citi now projects Volkswagen's EBIT margin to fall to 3.9% in FY 2026, which is below the low end of the company's own guidance, and expects free cash flow to reach €3.5 billion, also at the bottom of the guidance range.

Citi analysts noted that the company faces structural headwinds driven by geopolitical considerations, including U.S. tariffs, which are beyond management's control. Despite the downgrade, the bank observed that Volkswagen's stock is trading at a multi‑year low and a record low valuation. Potential value sources highlighted include Volkswagen's stake in Porsche, now valued at €65 per Volkswagen share, and its Financial Services division, which holds €47 billion in equity, equating to €94 per share.

Citi set a bull‑case target price of €120 and a bear‑case target of €65, acknowledging that while management is pursuing cost‑reduction measures, the growing headwinds make it difficult to present a positive narrative for investors seeking momentum in European auto manufacturers.