UBS has upgraded Porsche AG (ETR:P911_p) to a Buy rating and raised its price target to €60 from €40, saying the German sports car maker is beginning to see the pieces of its multi-year turnaround fall into place.
In a research note titled "The icon strikes back," UBS identified three central elements that the bank believes will drive the recovery: a rebalanced product portfolio that reduces reliance on electric vehicles, stronger execution from new management, and a tightened cost structure designed around annual production of roughly 250,000 to 280,000 vehicles.
UBS modeled a significant improvement in profitability. The bank forecasts Porsche’s operating margin to climb from about 7% in 2026 to around 13% by 2030. That gain is attributed to roughly 1 billion of product-related profit improvement, approximately 1 billion in recurring cost savings, and 3 billion resulting from the non-repeat of one-off charges taken in 2025.
On a per-share and cash-flow basis, UBS projects earnings per share of 4.2 and free cash flow of about 3.7 billion by 2030. Those figures imply a free cash flow yield near 9% and a price-to-earnings multiple of approximately 11 times on the 2030 numbers.
UBS flagged a material short-term challenge in 2027, which it describes as the ICE Macan "gap year" - the interval between the phase-out of the petrol-powered Macan and the model's expected return around mid-2028 on Audi's updated platform. The bank estimates that this timing will reduce operating profit by about 600 million in 2027, and notes its forecast for that year sits roughly 25% below current Street consensus on an absolute profit basis.
"The ICE Macan \"gap year\" isnt reflected in consensus yet. However, we think the buy side is well aware as management has communicated proactively on the issue," the analysts led by Patrick Hummel said.
UBS expects limited further downside in China given Porsche's reduced exposure there, which the bank estimates is now about 12% of global volumes. UBS suggests a resilient floor of roughly 20,000 units annually in China, supported by loyal buyers who typically purchase high-specification vehicles.
Regarding corporate actions, UBS anticipates management will unveil an initial restructuring package as early as the Q2 results, followed by a more detailed plan at the capital markets day in October. That event - date to be confirmed - is seen by the bank as the moment when management will provide clearer visibility on the route back to double-digit margins.
"We think the CMD in October (date tbc) will bring it all together," the analysts said.
The upgrade and higher price target reflect UBS's view that product, execution and cost actions can combine to restore profitability and cash generation. The bank's projections rely on the successful delivery of the items it identifies and on the assumption that the Macan timing and China demand perform close to its scenarios.
Methodology note: UBS's valuation and target reflect its internal forecasts and assumptions as outlined in the note titled "The icon strikes back."