Investing.com -- Citi has opened positive catalyst watches on BMW (ETR: BMWG) and Forvia (EPA: FRVIA), arguing that depressed sentiment across European autos has left both names with attractive tactical setups.
On BMW, the bank opened a 90-day upside watch running into the carmaker's Sept. 30 capital markets day, its first under a new chief executive.
Analyst Harald Hendrikse pointed to shares down 38% year to date and trading around 10 euros below net cash, with expectations at record lows. "Will investors further short the shares into the CMD? We don't think so. Rather we believe any positive headlines could in fact lead to some short covering," he wrote.
Citi noted BMW's June profit warning cut full-year auto EBIT margin guidance by 60% to 3% to 5%, the weakest in roughly two decades.
But the bank argued the negative China earnings delta has likely peaked after three consecutive years of warnings, and that shares recovered at least 10 euros within three months of the previous two China warnings.
The bank sees scope for positive surprise through model and technology cuts, lower capex and R&D, and higher cash returns from a record industrial cash balance. BMW remains rated Neutral.
For Forvia, Citi opened a 30-day upside watch ahead of possible European Commission local-content or industry-support measures.
Analyst Ross MacDonald said the shares trade near year-to-date lows despite reaffirmed guidance, with the debate expected to shift toward capital returns in 2027.
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