Should I buy BMW shares in January 2023? | Invezz

Bayerische Motoren Werke AG (ETR: BMW) shares have advanced more than 15% since the beginning of October 2022, and the current share price stands at €83.

European automakers continue to face challenges, but despite this, BMW reported strong third-quarter results last month.

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BMW continues to focus on speeding up electric vehicle adoption

Bayerische Motoren Werke AG is a famous German automaker known for its automobile brands, such as BMW and Mini, as well as ultra-luxury Rolls-Royce.

The company reported strong third-quarter results last month; total revenue has increased by 35.3% Y/Y to €37.18 billion, while the GAAP earnings per share were €4.25.

BMW continues to focus on speeding up electric vehicle adoption, and sales momentum remains strong as demand for BMW iX, and BMW i4 is constantly rising.

By September 2022, BMW delivered over 128,000 electric vehicles to customers, which is more than twice the number for the same period in 2021.

Despite supply bottlenecks and high inflation, the number of deliveries is forecast to increase significantly in the fourth quarter compared to the third quarter of 2022.

Another positive information is that the company’s management expects pre-tax earnings to be significantly higher for the 2022 fiscal year compared to the 2021 fiscal year.

At the same time, many European automakers continue to face challenges, and according to European Automobile Manufacturers’ Association (ACEA), October EU commercial vehicle registrations struggle for the sixteenth month in a row, down -8.9%.

Germany had the sharpest decline in total commercial vehicle sales, down -12.4%, followed by France and Italy with more modest losses of -5.3% and -3.9%.

Supply chain issues and higher raw material prices are still the main limiting factor for many companies, while the rise in energy prices since the Russia-Ukraine war could be a much longer-lasting shock to many European countries. Goldman Sachs reported:

We continue to expect growth to slow through the first several months of 2023 driven by the impact of the energy crisis on the German economy.

With a market capitalization of €55 billion, the shares of BMW are not expensive, but investors should keep in mind that the global economy faces a recession risk that could dent corporate earnings and stock markets.

BMW trades at less than three times TTM EBITDA which is very attractive, but if Europe enters into recession, the share price could be at a lower price level.

Technical analysis

BMW shares have been advancing last several weeks, and for now, “bulls” control the price movement.

The price has moved again above the 10-day moving average, which is certainly a positive sign; still, if the European stock market enters a more significant correction phase, the share price could be at lower levels.

The current support levels are €80 and €70; €90 and €100 represent the current resistance levels. If the price jumps above €90, it would be a signal to trade BMW shares, and the next target could be around €100.

On the other side, if the price falls below €80, it would be a “sell” signal, and the next target could be €75.

Summary

Bayerische Motoren Werke AG shares have been advancing last several weeks, and the company continues to focus on speeding up electric vehicle adoption. With a market capitalization of €55 billion, the shares of BMW are not expensive, but investors should keep in mind that the global economy faces a recession risk that could dent corporate earnings and stock markets.