Barclays cuts Porsche's 2026-2028 earnings forecasts again, maintaining its Equal Weight rating and EUR 47.5 price target

Overview

The report updates its earnings model ahead of Porsche's October 7 Capital Markets Day. Barclays again cuts its 2026-2028 EBIT forecasts due to additional restructuring charges, volume and fixed-cost pressure, high depreciation, and the impact of the EV mix. It continues to recognize the long-term potential from cost restructuring, new models, and cash returns, but believes near-term consensus estimates are too high and the valuation is expensive relative to peers. It therefore maintains its EQUAL WEIGHT rating and lowers its price target to EUR 47.50.

Core views

Barclays had already noted in its July 30 results commentary that market expectations for Porsche in 2026-2027 were too high. After fully incorporating first-half results and information from the analyst conference call, the report cuts its reported EBIT forecasts for 2026, 2027, and 2028 by 14%, 17%, and 10%, respectively, and adjusts the corresponding EBIT margins to 6.2%, 6.7%, and 9.5%. These forecasts are 5%, 18%, and 1% below Bloomberg consensus EBIT estimates, respectively. The main additional pressure in 2026 is approximately EUR 300mn of “Future Plan” charges related to further workforce reductions. The 2027 cut reflects approximately EUR 300mn of restructuring charges, an approximately 25,000-unit volume shortfall caused by the phaseout of the ICE Macan and the resulting fixed-cost under-absorption, as well as persistently high depreciation and amortization. The 2028 cut mainly reflects a lower starting point rather than a fundamental change in the pace of year-on-year improvement. The Group's EBIT margin was 7.8% in 1H26, including EUR 400mn of negative one-offs, while a provision reversal related to supplier compensation contributed a positive EUR 300mn, implying an underlying EBIT margin of approximately 8.4%. This underlying performance benefited from favorable pricing and mix, including strength in the 911 and a relatively low BEV share ahead of the e-Cayenne ramp-up in the second half. The new Future Plan will add EUR 300mn of restructuring charges, bringing total one-off charges in 2H26 to EUR 700mn-EUR 800mn and reducing the reported second-half EBIT margin by approximately 410 basis points. Even if second-half volumes are broadly flat versus the first half, normalization of the elevated 911 mix and the ramp-up of the lower-margin all-electric e-Cayenne could still reduce the second-half margin to approximately 4%, with the full-year margin expected to land in the lower half of the company's 5.5%-7.5% guidance range. One-off items are expected to decline significantly to a low-triple-digit million-euro amount in 2027, creating an approximately 90-basis-point margin drag, down from EUR 800mn-EUR 900mn and 240 basis points in 2026. However, this improvement will be offset by other pressures: the phaseout of the ICE Macan is expected to reduce volumes by approximately 25,000 units and cause fixed-cost under-absorption; depreciation and amortization will remain high; a higher BEV share and raw-material costs will create additional pressure; and the net benefits from restructuring will not become clearly visible until 2028. Barclays therefore expects the margin to improve only modestly from 6.2% in 2026 to 6.7% in 2027, making a significant recovery unlikely. In 2028, the margin is expected to rise to 9.5% as negative one-off items do not recur, restructuring begins to generate net benefits, and new models contribute. A double-digit margin and a return to the company's long-term 10%-15% target range are not expected until 2029, one year later than previously forecast. The volume trajectory also explains why near-term margins remain constrained. Barclays expects total deliveries to decline from 279,449 units in 2025 to 237,422 units in 2026, down 15% year on year, and to fall further to 212,845 units in 2027, down 10% year on year, before rebounding to 239,780 units in 2028, up 13% year on year, as new models are launched. The report applies a 45% volume drop-through rate to both volume declines and recoveries, meaning the negative volume drop-through in 2027 will offset cost-reduction benefits, while recovering volumes will only begin to support margins in 2028 and beyond. The 2026 mix will still receive some support from the 911: the report forecasts 59,914 deliveries of the 911, up 16% year on year and accounting for 25.2% of total deliveries. However, Macan, Panamera, and Taycan deliveries are expected to decline by 20%, 33%, and 28%, respectively. The October 7 Capital Markets Day is the report's key event. Barclays expects Porsche to present a ten-year strategic framework called “Sportwagenschmiede 2035,” focusing on revising its product strategy, establishing a new strategic framework, and reducing costs. Product innovation is more long term, while the near-term focus is on costs. The report expects the company to maintain its long-term EBIT margin target of 10%-15% and explain the path and timetable for achieving it, while potentially proposing lower capital expenditure and R&D investment over the planning period. The report expects the company to plan very conservatively for China, essentially assuming no meaningful recovery. The BEV share is expected to reach approximately 30% in 2H26 and remain broadly at that level over the medium term. Regarding the product cadence, Barclays expects the all-electric 718 to launch in 2H27, the M1 successor to the ICE Macan in 2028, and the K1 luxury SUV, positioned above the Cayenne and offering ICE and plug-in hybrid versions, in 2029. The report also believes the Taycan could potentially be discontinued and expects Porsche to increase the number of limited-edition 911s and high-end derivatives, with greater emphasis on personalization and the “Sonderwunsch” program. Together with cost reductions, new-model volume growth, net restructuring savings, and the gradual phaseout of supplier compensation payments, these measures underpin the case for an earnings recovery after 2028. In terms of valuation, Porsche's normal historical 12-month forward P/E range is approximately 10x-20x. At the 15x midpoint, the share price of approximately EUR 44.5 already implies EPS of approximately EUR 3.00 or an EBIT margin of approximately 10.5%, an earnings level Barclays believes remains reasonable for 2028/29. The report continues to use a 15x 2028E P/E in its sum-of-the-parts valuation, with its DCF assumptions unchanged. The EUR 47.50 price target corresponds to 2028 and 2029 P/E multiples of approximately 18x and 13x, respectively, and free cash flow yields of 7.2% and 9.2%. Although 15x is significantly above BMW and Mercedes-Benz Group, there is currently no negative catalyst sufficient to reverse the positive rerating. On the other hand, the valuation remains elevated and sell-side consensus estimates have not yet been reduced sufficiently, so the report maintains its EQUAL WEIGHT rating. Cash flow is a positive component of the long-term view. Barclays expects Porsche to generate approximately EUR 1bn of free cash flow in 2026, within the company's 3%-5% free cash flow margin guidance, including approximately EUR 1.5bn of cash outflows for strategic restructuring and Audi license fees. As EBITDA improves and Audi license fees cease, free cash flow is expected to recover to approximately EUR 4bn in 2029/30, returning to the level reached in 2022/23 and creating scope for significantly higher shareholder returns. The model forecasts company-defined free cash flow to decline from EUR 1.511bn in 2025 to EUR 1.003bn in 2026, before rising to EUR 2.469bn in 2027 and EUR 2.889bn in 2028. The model is highly sensitive to volume drop-through, one-off items such as restructuring and supplier compensation, and cost savings after inflation. Barclays incorporates EUR 350mn of year-on-year net improvement from cost savings, one-off items, depreciation and amortization, and raw-material inflation in 2027, below its previous EUR 500mn estimate. It includes a further EUR 100mn of net improvement in 2028, below the previous EUR 300mn, with EUR 100mn equivalent to approximately 30 basis points of EBIT margin. Given uncertainty over timing and amounts, the model does not include potential book gains or cash inflows from the sale of Bugatti/Rimac. The report estimates that these could each be approximately EUR 500mn-EUR 1,000mn, but consensus estimates likewise do not include these impacts. Recent trading data continue to show regional divergence and overall pressure. The year-to-date trend in China through June implies a roughly 40% year-on-year decline in retail sales to 25,000-27,000 units. US sales declined 19% year on year in July, underperforming the market's 1.9% decline and also worse than the approximately 15% year-to-date decline. Sales in the five major EU markets were flat year on year in July, underperforming market growth of 5.2% but better than the approximately 5% year-to-date decline. The upside scenario requires stronger-than-expected resilience in volumes, pricing, and mix, a full reversal of one-off charges, and rapid benefits from strategy and restructuring, supporting a valuation above 15x. The downside scenario entails a weaker recovery in volumes, pricing, and mix, slower restructuring benefits, and a reduction in the 2028 P/E to below 15x due to market uncertainty over the structural earnings recovery.

Analysis framework

Barclays first derives the underlying operating margin from the reported first-half margin, one-off items, and provision reversals, then incorporates the effects of second-half restructuring charges, volumes, product mix, and the EV ramp-up into its full-year forecast. It then breaks down the annual impacts of the ICE Macan phaseout, fixed-cost absorption, depreciation and amortization, raw materials, cost savings, and new-model launches, linking changes in deliveries to margins using a 45% volume drop-through rate. The valuation section considers the historical 12-month forward P/E range, a sum-of-the-parts valuation based on a 15x 2028E P/E, and unchanged DCF assumptions, while using free cash flow yield to assess medium- to long-term shareholder-return potential. The report also tests volume resilience, the pace of restructuring, and changes in valuation multiples under upside and downside scenarios.

Methodology notes

• Company Fundamentals and Financial FrameworkOperating/Financial Leverage Analysis

  45% volume drop-through rate

  The report assumes that 45% of the revenue change corresponding to each incremental or lost unit of volume flows through to profit. It applies the same parameter during both volume declines and recoveries to measure the EBIT impact of changes in fixed-cost absorption.

• Industry/Sector Analysis FrameworkVolume-price decomposition

  Decomposition of volumes, pricing, and product mix

  The report examines deliveries, pricing, and model mix separately to explain why the high 911 share supported first-half earnings and why the e-Cayenne ramp-up and normalization of the 911 mix will dilute second-half margins.

• Valuation MethodPE/PEG valuation

  Historical P/E range and 15x 2028E P/E

  The report refers to Porsche's normal 12-month forward P/E range of approximately 10x-20x and uses the 15x midpoint to value 2028 earnings, assessing the extent of the earnings recovery implied by the current share price and price target.

• Valuation MethodSOTP Valuation

  SoTP valuation based on a 15x 2028E P/E

  Barclays continues to use a 15x 2028E P/E in its sum-of-the-parts valuation framework and, on this basis, reduces its price target from EUR 50 to EUR 47.50.

• Valuation MethodDCF Valuation

  DCF assumptions remain unchanged

  The report uses discounted future cash flows as another valuation basis; this earnings forecast update does not change the existing DCF parameters.

• Company Fundamentals and Financial FrameworkFree cash flow analysis

  Free cash flow margin, yield, and shareholder returns

  The report incorporates capital expenditure, R&D, strategic restructuring, and license-fee cash outflows into its free cash flow forecasts and uses 2028/29 free cash flow yields of 7.2%/9.2% to assess future shareholder-return capacity.

• (Out-of-vocabulary Method)

  Key-assumption sensitivity and upside/downside scenario analysis

  The report tests the outcomes under different changes in volume drop-through, one-off charges, cost savings, and valuation multiples to illustrate the potential range for the pace of earnings recovery and valuation repricing.

Asset mapping & comparison

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

• Porsche AG (P911_p.DE)

  The report believes the company faces near-term earnings and volume pressure but can benefit over the medium to long term from cost restructuring, new models, fading one-off charges, and a free cash flow recovery.

  Strengths

  The 911 and product mix are resilient; compared with German luxury-auto peers, normalization of the China business is further advanced; the company is relatively well positioned to address structural pressures such as Chinese brands entering Europe; and it has long-term potential for a 10%-15% EBIT margin and higher shareholder returns.

  Weaknesses

  Volumes will decline in 2026-2027, fixed-cost absorption will be insufficient, depreciation and amortization will remain elevated, the all-electric model mix will dilute margins, and the current valuation is high.

  Comparison

  The valuation is significantly higher than those of BMW and Mercedes-Benz Group, but Barclays believes Porsche offers better resilience in volumes, pricing, and product mix, as well as stronger potential for a faster recovery.

  Risks

  If resilience in volumes, pricing, and product mix is weaker than expected, or restructuring and strategic measures take longer to deliver results, the earnings recovery could be delayed further and the 2028 P/E could fall below 15x.

Key data

• Rating and Price TargetEQUAL WEIGHT; EUR 47.50, previously EUR 50.00Rating maintained; price target cut by 5%
• Reference Share PriceEUR 44.65Price as of August 19, 2026; 52-week range EUR 35.62-50.66
• 2026-2028 EBIT Forecast Revisions-14% / -17% / -10%Magnitude of the cuts to reported EBIT forecasts in this update
• 2026-2028 EBIT Margin Forecasts6.2% / 6.7% / 9.5%A return to the long-term 10%-15% target range is not expected until 2029
• Versus Bloomberg EBIT Consensus-5% / -18% / -1%Corresponding to 2026, 2027, and 2028, respectively
• Group Revenue2025A €36,272mn; 2026E €35,146mn; 2027E €33,800mn; 2028E €36,632mn2025-2028 CAGR of 0.3%
• Group EBIT2025A €413mn; 2026E €2,167mn; 2027E €2,272mn; 2028E €3,487mnCorresponding EBIT margins of 1.1%, 6.2%, 6.7%, and 9.5%
• Net Income and Earnings per ShareNet income: €310mn / €1,496mn / €1,571mn / €2,406mn; EPS: €0.34 / €1.64 / €1.72 / €2.64Corresponding sequentially to 2025A, 2026E, 2027E, and 2028E
• Dividend per Share2025A €1.01; 2026E €1.25; 2027E €1.30; 2028E €1.602025-2028 CAGR of 16.6%
• Company-Defined Free Cash Flow2025A €1,511mn; 2026E €1,003mn; 2027E €2,469mn; 2028E €2,889mn2025-2028 CAGR of 24.1%
• Capital Expenditure and Cash R&DCapital expenditure: -€1,500mn / -€1,400mn / -€1,340mn / -€1,300mn; cash R&D: -€2,292mn / -€2,300mn / -€2,300mn / -€2,300mnCorresponding sequentially to 2025A, 2026E, 2027E, and 2028E
• Industrial Net Funds2025A €7,347mn; 2026E €5,902mn; 2027E €5,992mn; 2028E €6,969mnThe original table presents this as industrial net debt/funds, with negative debt representing net funds
• 1H26 Margin BridgeReported 7.8%; underlying approximately 8.4%Includes €400mn of negative one-off items and a €300mn reversal of supplier compensation provisions
• 2H26 One-Off Charges€700-800mnExpected to reduce the Group's reported second-half EBIT margin by approximately 410 basis points, with the second-half margin forecast at approximately 4%
• 2027 Restructuring and Volume PressureApproximately €300mn of restructuring charges; approximately 25,000-unit volume shortfallOne-off items reduce the margin by approximately 90 basis points, while the phaseout of the ICE Macan will also cause fixed-cost under-absorption
• Total Delivery Forecasts2025 279,449 units; 2026E 237,422 units; 2027E 212,845 units; 2028E 239,780 unitsCorresponding to year-on-year changes of -10%, -15%, -10%, and +13%
• Long-Term Margin Target10%-15%Target unchanged; Barclays expects a return to this range in 2029
• Valuation Implied by Price Target2028E/2029E P/E of 18x/13x; free cash flow yield of 7.2%/9.2%Valuation corresponding to the EUR 47.50 price target
• Valuation BenchmarkHistorical 12-month forward P/E of approximately 10x-20x; SoTP uses a 15x 2028E P/EA share price of approximately EUR 44.5 implies approximately EUR 3.00 EPS or an EBIT margin of approximately 10.5%
• Free Cash Flow Recovery PathApproximately €1bn in 2026; approximately €4bn in 2029/302026 includes approximately €1.5bn of cash outflows for strategic restructuring and Audi license fees
• Model Sensitivity45% volume drop-through rate; €350mn net improvement in 2027; a further €100mn net improvement in 2028Previously €500mn and €300mn, respectively; €100mn corresponds to approximately 30 basis points of EBIT margin
• Excluded Impact of a Bugatti/Rimac SalePotential book gains or cash inflows could each be approximately €500-1,000mnDue to uncertainty over timing and amounts, neither the current model nor consensus estimates include these impacts
• Recent Regional SalesChina approximately -40% to 25,000-27,000 units through June; US -19% in July; five major EU markets flat in JulyUS market -1.9% over the same period and approximately -15% year to date; five major EU markets +5.2% over the same period and approximately -5% year to date

Impact & implications

The report believes Porsche's near-term earnings recovery will be slower than previously expected. Following high one-off charges and mix dilution in 2H26, 2027 will still be affected by the phaseout of the ICE Macan, fixed-cost under-absorption, high depreciation, a higher EV share, and raw-material costs. A genuine acceleration in margins will depend on net restructuring benefits, new-model volume growth, the disappearance of negative one-off items, and the phaseout of supplier compensation payments after 2028. Long-term free cash flow and shareholder-return potential are improving, but the current valuation already prices in a substantial recovery, while consensus estimates have not yet been reduced sufficiently. Barclays therefore considers an Equal Weight rating more appropriate.

Risks

• Weaker-than-modeled resilience in volumes, pricing, or product mix could amplify fixed-cost under-absorption and reduce margins.
• If strategic adjustments and restructuring savings are not achieved quickly, the recovery to double-digit profitability could be delayed further.
• High one-off charges in 2026, ongoing restructuring charges in 2027, and supplier compensation payments could differ from expectations.
• The approximately 25,000-unit volume shortfall caused by the phaseout of the ICE Macan, together with a higher BEV share and rising raw-material costs, could limit margin improvement in 2027.
• Delivery forecasts face downside risk if the Chinese market continues to decline significantly or if US or European sales are weaker than expected.
• The current valuation is significantly higher than those of BMW and Mercedes-Benz Group; if the market loses confidence in a structural earnings recovery, the 2028 P/E could fall below 15x.
• The timing and amount of a Bugatti/Rimac sale remain uncertain, and the model does not include potential book gains or cash inflows.

What to watch

• Watch whether the October 7 Capital Markets Day provides a clear path and timetable for achieving the long-term 10%-15% EBIT margin target.
• Monitor product adjustments, cost reductions, and capital-expenditure and R&D plans under the ten-year “Sportwagenschmiede 2035” strategy.
• Track the EUR 700mn-EUR 800mn of one-off charges in 2H26, the approximately 4% second-half margin, and where the full-year result lands within the 5.5%-7.5% guidance range.
• Monitor whether net restructuring savings become clearly visible from 2028 and the actual earnings impact of the approximately 25,000-unit Macan volume shortfall in 2027.
• Track sales in China, the United States, and the five major EU markets, as well as whether the BEV share reaches approximately 30% in 2H26 and remains stable over the medium term.
• Monitor the launch progress of the all-electric 718, M1, and K1 in 2H27, 2028, and 2029, respectively, as well as strategic changes involving the Taycan, high-end 911 variants, and the personalization business.
• Watch whether sell-side earnings estimates for 2026-2028 continue to decline and whether the market can sustain a valuation multiple of 15x or higher.
• Track whether free cash flow can recover from approximately EUR 1bn in 2026 to approximately EUR 4bn in 2029/30 and translate into higher shareholder returns.