UBS announced on Wednesday that it had downgraded its recommendation on Renault shares from "neutral" to "sell" with a target price reduced from €38 to €28.

In a research note released this morning, the analyst said he expects the French automotive group to enter a period in which its margins will decline, or at best stabilize, and return to lower levels, close to those recorded in the past.

After Luca de Meo's departure and the profit warning issued in July, Renault's share price has held up fairly well, notes the broker, who nevertheless expects the situation to deteriorate in view of the decline in the manufacturer's order book, the deterioration in prices, the deterioration in its mix/price ratio, and the rise in dealer inventories.

All of this suggests, according to UBS, that 2026 will be a more difficult year, leading it to forecast operating profit (EBIT) for the coming financial year to be 16% below consensus estimates.

While the annual results scheduled for February 19 and the investor day in March remain two catalysts to watch, in his view, the analyst indicates that he expects a more cautious tone from management and predicts a return of the operating margin to its historical levels, i.e., 3-4%, while the consensus currently anticipates stable or even steadily improving margins.