FRANKFURT (dpa-AFX) – Auto stocks were among the most sought-after shares on the German and European stock markets on Friday. Investors focused on annual outlooks for the sector from major banks. Market participants leaned more toward the optimistic arguments of the analysis firm Jefferies, while the more critical tones from British investment bank Barclays found less favor ahead of the weekend.

In the DAX, Volkswagen ranked among the top gainers with a share price increase of 2.1 percent, buoyed by optimism from both research houses. BMW shares rose by 0.8 percent, while Mercedes-Benz climbed 1.5 percent. In the MDAX, Porsche AG also advanced by 1.9 percent.

Internationally, Stellantis shares jumped 2.3 percent, while Renault was up 0.7 percent. On Friday, the European auto sector was among the strongest industries in the Eurozone and recently outperformed even the EuroStoxx 50.

Jefferies analyst Philippe Houchois expects optimistic forecasts for 2026 from both Volkswagen and Stellantis, maintaining his buy recommendation for both and raising their price targets significantly. The two automakers are likely to predict improvements in their operating businesses and could surprise with strategic decisions. VW is expected to continue focusing on cost control and a software partnership with Tesla rival Rivian.

BMW and Mercedes-Benz, on the other hand, are facing a transitional year, with tariff burdens in the first quarter, while the model cycle in the second half should provide support and market share in China may have bottomed out. Overall, Houchois anticipates a slightly more upbeat tone from BMW than from Mercedes in the new year. Renault and Porsche are expected to see somewhat weaker margins looking ahead to 2026. He maintained a "Hold" rating on these two, as well as BMW and Mercedes, but raised their price targets across the board.

From the perspective of Barclays expert Henning Cosman, tariffs, emissions regulations, EU regulations, and the Chinese market will remain central topics in the coming year. He remains generally negative on the sector, citing persistent structural headwinds. Cosman downgraded BMW and Porsche AG to "Underweight" – primarily due to high valuations and expectations below consensus.

Cosman favors Mercedes over BMW due to better cash flow and greater potential for self-improvement. For the Stuttgart-based automaker, he maintained his "Equal Weight" rating and raised the price target. Among his sector favorites is VW, which continues to be rated "Overweight." Cosman also remains positive on Renault, in part due to its strong free cash flow./niw/tih/mis