Porsche is worth much less than what’s being touted, HSBC says

Analysts at HSBC Holdings Plc poured cold water on the lofty valuations being assigned to Volkswagen AG’s Porsche unit ahead of a share sale by the sportscar-maker that’s set to be one of Europe’s biggest initial public offerings.

Porsche is worth between 44.5 billion euros ($45.1 billion) and 56.9 billion euros, analysts including Edoardo Spina said in a note. That’s lower than the 60 billion euros-to-85 billion euros ballpark being talked about in the media, they wrote.

The analysts cautioned that pricing power may wane as supply recovers over the next two years, while demand may take a hit under a recessionary environment.

HSBC’s model is based on comparing multiples with luxury vehicle rival Ferrari NV as well as German peers like Mercedes-Benz Group AG and Bayerische Motoren Werke AG, the analysts wrote. The analysts have removed Tesla Inc. from Porsche’s peer group as the US firm’s multiples reflect sales growth and software revenue potential that aren’t applicable to the German firm to the same degree.

HSBC downgraded its rating on VW ordinary shares to hold from buy, assigning a price target of 188 euros.

The discussion of Porsche’s valuation comes as Intel Corp. scales back expectations for its Mobileye IPO in the face of a broader stock slump. The firm expects the IPO to value the self-driving technology business at as much as $30 billion, less than originally hoped, Bloomberg reported September 12, citing people familiar with the process.

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