Consider this “buy” recommendation on Volkswagen from analysts at Germany’s DZ Bank:
Even if the VW share is overvalued from the fundamental point of view, after Porsche’s announcement yesterday, we expect massive covered short-selling. We therefore change our recommendation from “sell” to a “speculative buy.” Since such a short-squeeze scenario any price target can be no more than a guess, we have set the fair value at EUR 911.
A price of €911 would put Volkswagen stock on a prospective PE multiple of something like 80 times and bestow a market cap of €267bn.
After this week’s confirmation that Porsche has been quietly cornering the market in Volkswagen stock – crippling an unknown number of hedge funds in the process – shares in VW raced 147 per cent higher on Monday to €520. During early trade on Tuesday the quote fell back to €471, although traders warned that stock was changing hands at wildly differing prices in a dislocated market.
Related links
The disreputable market in Volkswagen – FT Alphaville
Porsche’s derivatives move doubles VW’s share price – FT