Goldman Sachs maintains Buy rating on BMW, modestly lowers target price to €82

Overview

This report is Goldman Sachs' earnings forecast and valuation update following BMW's 2Q26 results. The key adjustment stems from higher-than-previously-assumed non-cash restructuring and severance provisions, primarily concentrated in the Auto business in the second half of 2026. Despite the downward revision to near-term FY26 earnings forecasts, the report maintains its Buy rating on BMW.

Core views

Goldman Sachs believes investors will focus going forward on the underlying earnings power of the China business and the details of the restructuring. Management confirmed that the joint venture remains profitable and contributes to Group earnings. Further information is expected from the CMD on September 29–30 and Brilliance's 1H26 results. The report also expects BMW to continue delivering strong shareholder returns through buybacks, with Goldman Sachs estimating buybacks of €2.1bn, above the market consensus of €1.2bn.

Analysis framework

The report uses post-results earnings forecast revisions, comparison with Visible Alpha consensus estimates, P/E valuation and risk-scenario analysis. Valuation is based on a 50/50 blend of FY27/28E EPS, applying a target P/E multiple of 7.5x to derive the 12-month target price.

Methodology notes

• Valuation methodsP/E valuation

  Price-to-earnings target multiple method

  Goldman Sachs applies a target P/E of 7.5x to a 50/50 weighted blend of FY27/28E EPS, resulting in a 12-month target price of €82 for BMW.

• Company factorsGS Factor Profile

  Comparison of growth, financial returns, valuation multiples and composite factors

  Goldman Sachs' factor framework compares indicators including a stock's growth, financial returns and valuation multiples with the market and industry peers to provide investment context.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• BMWG.DE

  Covered security

  Strengths

  Buy rating maintained; buybacks expected to exceed consensus; joint venture continues to contribute to Group earnings.

  Weaknesses

  FY26 Auto EBIT and margin lowered; near-term results pressured by restructuring provisions.

  Comparison

  FY26 Group EBIT is 13.4% below consensus, FY27 is 1.9% above consensus and FY28 is 3.8% below consensus.

  Risks

  Slowdown in China's premium vehicle market, pricing pressure, Neue Klasse ramp-up and software execution, BEV profitability reaching parity more slowly than expected, higher investment intensity and capital allocation, and uncertainty surrounding tariffs and trade policy.

Key data

• FY26 Group adjusted EBIT forecast adjustment-7.5%Primarily driven by higher non-cash restructuring provisions.
• FY26 Auto EBIT forecast€2.19bnImplies a 2.0% margin, below the previous €2.87bn and 2.6%.
• FY26/27/28E Group EBIT€5.0bn / €7.7bn / €8.7bnVersus consensus estimates of -13.4% / +1.9% / -3.8%, respectively.
• Buyback forecastGSe €2.1bn; cons €1.2bnGoldman Sachs expects shareholder returns to remain strong.
• 12-month target price€82Lowered from €84; Buy rating maintained.

Impact & implications

In the near term, higher restructuring provisions weigh on 2026 Auto earnings and Group EBIT, but the cash outlay is expected to occur in 2027, with benefits reflected over the following two years. If the resilience of the China joint venture's earnings is confirmed, restructuring details become clear and buybacks are delivered, valuation could be supported. Conversely, demand for premium vehicles in China, pricing pressure or software execution issues could continue to weigh on share price performance.

Risks

• Further slowdown and pricing pressure in China's premium vehicle market.
• Problems with the Neue Klasse ramp-up or software execution.
• BEV profitability reaching parity with conventional vehicles more slowly than expected.
• Higher investment intensity or weakening capital allocation discipline.
• Potential tariff and trade-policy headwinds.

What to watch

• Restructuring details disclosed at the CMD on September 29–30.
• Underlying earnings power of the China business and joint venture.
• Further validation of BMW's joint-venture earnings from Brilliance's 1H26 results.
• Size and pace of buyback plan execution.
• 2H26 Auto margins and implementation of restructuring provisions.