Volkswagen Scandal: Analysts Downgrade Shares

Volkswagen has been accused by the Environmental Protection Agency of manipulating diesel emission tests, causing Morningstar equity analysts to lower the shares' fair value

Richard Hilgert 23 September, 2015 | 12:20PM

We have lowered our fair value estimate for Volkswagen (VOW) to €210 from €230. The decrease is as a result of the potential Environmental Protection Agency, or EPA, and California Air Resources Board, or CARB, fines and probable court litigation that may result from alleged manipulation of diesel engine emission testing for regulatory requirements in the U.S.

Volkswagen could face fines up to $37,500 per vehicle

Even though some media reports have speculated that the EPA fine could be as much as $18 billion, we have reserved EUR 9 billion in our DCF model for fines and litigation. We think that any weakness in the shares of Volkswagen stock should be viewed as an opportunity for long-term investors to own the shares at discounted prices. Prior to the circulation of media reports about the EPA and CARB accusations, the stock was already trading at a 23% discount relative to our new EUR 210 fair value estimate.

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Volkswagen AG164.70 EUR-1.73

About Author

Richard Hilgert  Richard Hilgert is a securities analyst on the Industrials Team.

Audience Confirmation


By clicking 'accept' I acknowledge that this website uses cookies and other technologies to tailor my experience and understand how I and other visitors use our site. See 'Cookie Consent' for more detail.

  • Other Morningstar Websites
© Copyright 2020 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Cookies