Mercedes-Benz Rallies Twice in Two Days, but the Profit Story Still Needs Proving
Published on 11/05/2026 at 03:50 | Editorial boerse-global.de
Mercedes-Benz shareholders have had a rare run of good news this week. The stock climbed 5.0% one session and 4.7% the next, lifted first by a friendlier European auto sector and then by a broad recovery in German equities following the US midterm elections. Neither move, however, came with a company-specific catalyst attached to it — and neither changes the fact that the carmaker trimmed its full-year guidance only about a week ago.
That distinction matters more than the headline gains. A rising tide across the sector raises the appetite for auto stocks, but it does not rewrite a single line of Mercedes-Benz's own earnings. What investors are really weighing is whether the improving mood can carry the shares further, or whether the company first needs to show tangible progress in its own business.
Continental's Upgrade Sets the Tone
The first leg of the rally traced back to Continental, which buoyed the wider European auto complex by lifting its forecast for the adjusted EBIT margin to 13.4–14.0%, up from a previous range of 12.0–13.5%. Mercedes-Benz was among the manufacturers that benefited from the improved sentiment.
The nuance is easy to lose. Continental's rosier outlook is not an earnings improvement at Mercedes-Benz. It may raise the willingness to take another look at auto stocks, but whether that turns into a durable re-rating depends on how convincingly Mercedes-Benz stabilizes its own profitability.
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The Numbers Behind the Caution
The operating benchmark remains the quarterly report. For the third quarter of 2026, Mercedes-Benz posted revenue of EUR 30.7 billion, an adjusted EBIT of EUR 1.78 billion and net profit of EUR 1.52 billion. A second reading of the figures puts EBIT at EUR 1.77 billion.
Those results describe the starting point; they do not answer the question of improvement. Roughly a week ago the group cut its full-year profit guidance, citing a tougher market environment in China and higher costs in the final quarter. For 2026, Mercedes-Benz expects group EBIT at the prior-year level. At Mercedes-Benz Cars, the adjusted return on sales is projected at 2% to 3%, while free cash flow from the industrial business is seen well below the previous year's figure.
Cost Cuts Announced, Not Yet Delivered
On October 28, CEO Ola Källenius said the voluntary severance program for employees in indirect functions in Germany would resume in December. He did not give a figure for planned job reductions.
For investors, the line between announcement and result is the one to watch. The resumption has been flagged but is not yet evidence of an improved earnings position. What counts is not the existence of the program but its eventual effect — and no concrete earnings relief can be derived from the announcement itself. Its scope is a defined group of employees in Germany, which supports neither a sweeping overhaul of the whole company nor a quantifiable impact on profit.
Two Buy Calls, Two Different Targets
Analyst action this week underscored the gap between recommendation and expectation. Deutsche Bank Research kept Mercedes-Benz at "Buy" on Monday and reaffirmed its EUR 65 price target — neither a fresh buy call nor an upgrade. The DZ Bank, by contrast, cut its fair value from EUR 55 to EUR 48 on Friday while also sticking with "Buy."
That combination — a lower valuation alongside an unchanged rating — is precisely why the two should be read separately. The confirmation from Deutsche Bank offers a positive valuation perspective but no additional operating evidence. The trimmed target at DZ Bank shows that conviction in the business outlook has cooled even where the buy case stands.
Research Reveals Point to a Longer Game
Away from the earnings debate, Mercedes-Benz presented new research projects a day before the second rally. They include a holographic windshield display and LED technology embedded in vehicle glass, plus a power converter rated at up to 3 kW and designed for an 800-volt architecture.
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The projects shift attention toward technical development potential rather than the near-term margin picture. Both levels need to be kept apart: research can open up prospects, but it does not substitute for proof of higher earnings. Nor can the announcement be pinned down as a confirmed trigger for the share price move.
What Would Make the Rally Stick
The bullish case combines the friendlier sector view with progress at Mercedes-Benz itself. If the company implements its cost measures effectively and stabilizes earnings, the recent impulse could amount to more than a knee-jerk reaction to another company's news. Sector sentiment and corporate development would then pull in the same direction, rather than the environment alone carrying the stock.
The bearish scenario is a divergence: industry mood improves while Mercedes-Benz fails to convince on earnings stabilization. In that case the latest advance would remain primarily an environmental impulse, and the positive analyst stance would not offset the risk. Should confidence in the effect of the company's own measures falter, the reduced annual forecast would likely carry more weight again. The verdict therefore hinges less on Continental's success than on execution in Stuttgart.
The next confirmed company date is the Sustainability Update 2026 on November 10, 2026, which offers a concrete occasion to reassess corporate communications — though a new financial forecast should not automatically be expected from it. The voluntary severance program is due to resume in December. The sequence is what matters: the announced measure would need to be followed by traceable progress, and only that could give the recent share price momentum an operating foundation.
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