Goldman Sachs maintains its Buy rating on Mercedes-Benz Group AG and raises the target price to €67

Overview

This report is Goldman Sachs' forecast update following Mercedes-Benz Group AG's 2Q26 results. Goldman Sachs raises its FY26 Group adjusted EBIT forecast by 5.6%, as adjusted EBIT and ROE in Financial Services significantly exceeded expectations and full-year adjusted ROE guidance was raised to 12%-14%. At the same time, Goldman Sachs trims its Cars forecast slightly to reflect cost inflation and pressure on the China business in the second half of the year.

Core views

The core view is that strong Financial Services performance improves the Group's earnings outlook, while buybacks and proceeds from the Athlon sale are expected to support shareholder returns. However, the Cars business faces pressure from raw materials, logistics, energy costs, and the Chinese market, with the full-year margin more likely to fall in the lower half of the 3%-5% guidance range. Goldman Sachs maintains its Buy rating and raises its 12-month target price to €67.

Analysis framework

The report applies post-results earnings forecast revisions, comparisons with Visible Alpha consensus, analysis of industrial free cash flow and buyback capacity, and a blended P/E and Daimler Truck stake net present value framework to derive the target price.

Methodology notes

• Valuation methodsBlended P/E and Daimler Truck stake NPV framework

  Values core-business EPS and the value of the remaining DTG stake separately

  The target price consists of two components: €58 per share from applying a 7.5x target P/E to 2027E EPS, plus €9 per share representing the NPV of Mercedes-Benz Group's Daimler Truck stake, assuming an orderly sale over five years and the return of proceeds to shareholders through buybacks.

• Factor analysisGS Factor Profile

  Compares the stock on relative growth, financial returns, valuation multiples, and composite dimensions

  The Goldman Sachs factor framework uses standardized rankings of forward-looking sales, EBITDA, EPS, ROE, ROCE, P/E, EV/EBITDA, and other metrics to compare the company's characteristics with the broader market and industry peers.

Asset mapping & comparison

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

• MBGN.DE

  Core covered security

  Strengths

  Significantly better-than-expected Financial Services performance, upgraded ROE guidance, strong buyback support, and substantial implied upside to the target price.

  Weaknesses

  Cars earnings forecast reduced, with industrial organic free cash flow weaker than previously expected.

  Comparison

  Goldman Sachs' FY26/27/28E Group adjusted EBIT forecasts are 4.7%, 6.0%, and 0.6% above Visible Alpha consensus, respectively.

  Risks

  Cost inflation, a slowdown in the China business, or Daimler Truck stake monetization occurring more slowly than expected or at prices below assumptions.

• Cars segment

  Main operating segment

  Strengths

  2Q26 adjusted EBIT and margin were above expectations.

  Weaknesses

  FY26E adjusted EBIT reduced to €3.40bn, with a 3.6% margin; full-year margin may fall in the lower half of the 3%-5% range.

  Comparison

  Goldman Sachs' Cars forecast is close to Visible Alpha consensus of €3.35bn / 3.6%.

  Risks

  Inflation in raw materials, logistics, and energy costs, as well as pressure on the China business.

• Financial Services segment

  Driver of the earnings upgrade

  Strengths

  2Q26 adjusted EBIT exceeded expectations by 37%, adjusted ROE exceeded expectations by 410 basis points, and full-year ROE guidance was raised by 200 basis points to 12%-14%.

  Weaknesses

  The report does not provide long-term risk details for the segment.

  Comparison

  Relative to Cars, Financial Services was the primary source of the Group EBIT upgrade.

  Risks

  If the ROE improvement proves unsustainable, it could weaken the durability of the Group earnings upgrade.

• Daimler Truck stake

  Source of valuation and cash returns

  Strengths

  The remaining stake's NPV contributes €9 per share to the target price, while disposal proceeds can support buybacks.

  Weaknesses

  Year-to-date sales have reduced the NPV of the remaining stake.

  Comparison

  Measured separately from the core-business P/E component in the valuation.

  Risks

  Slower-than-expected sales or market prices below assumptions would reduce distributable cash and buyback capacity.

Key data

• 12-month target price€67.00Raised from €65 previously.
• Current share price€47.10Price disclosed in the table.
• Implied upside42.3%Based on the €67 target price and €47.10 current price.
• Change in FY26 Group adjusted EBIT forecast+5.6%Primarily driven by better-than-expected Financial Services performance.
• FY26/27/28E Group adjusted EBIT€7.5bn / €8.8bn / €9.6bn4.7% / 6.0% / 0.6% above consensus, respectively.
• FY26E Cars adjusted EBIT and margin€3.40bn / 3.6%Previously €3.76bn / 4.0%; Visible Alpha consensus is €3.35bn / 3.6%.
• Full-year industrial free cash flow forecast€4.4bnThe company figure includes €1bn of proceeds from the Daimler Truck disposal; organic FCF is €3.4bn.
• Expected buyback size€3.2bnGoldman Sachs estimate, above Visible Alpha consensus of €2.3bn.

Impact & implications

The update is modestly positive for the stock: the higher target price and maintained Buy rating indicate that Goldman Sachs considers the risk/reward profile attractive. However, earnings quality is clearly mixed, and investors need to distinguish the Group-level upgrade driven by Financial Services from the pressures facing the core Cars business from costs, Chinese demand, and associate earnings.

Risks

• Deviation from the luxury-car strategy or insufficient focus.
• A slowdown or restrictions in key luxury markets.
• Failure to achieve cost savings.
• Inability to reduce capital expenditure.
• Daimler Truck stake monetization occurring more slowly than expected or at prices below assumptions, weakening distributable cash and buyback capacity.
• Raw material, logistics, and energy cost inflation exceeding expectations.
• Greater pressure on the China business and earnings from equity-accounted joint ventures in the second half of the year.

What to watch

• Whether full-year Financial Services adjusted ROE remains within the 12%-14% guidance range.
• Whether the Cars margin falls in the lower half of the 3%-5% guidance range and whether cost pressures ease.
• Changes in China business volumes, pricing, and earnings from equity-accounted joint ventures.
• The pace and transaction prices of Daimler Truck stake sales and the return of proceeds through buybacks.
• Whether the Athlon sale can be completed in 2H and its contribution to buyback capacity.
• Whether industrial organic free cash flow improves.