Mercedes-Benz: Upgrading Economic Moat Rating to Narrow From None, FVE Up EUR 5 to EUR 116

After reviewing Mercedes-Benz’s economic moat, we have upgraded our rating to narrow from none based on the strength of the brand and the firm’s intellectual property, both within the intangible asset moat source. We have been monitoring the development of the firm’s ROICs since the spinoff of Daimler trucks on Dec. 1, 2021, which is much more capital intensive than the light-vehicle business. We raised our fair value estimate to EUR 116 from EUR 111 with EUR 3 of the increase coming from the time value of money and EUR 2 coming from changes to our model to reflect our narrow moat rating. The 5-star shares of Mercedes-Benz currently trade at a compelling 44% discount to our new fair value.