Stellantis Started With an Overweight Rating at Barclays
Barclays started its coverage on Stellantis (NYSE:STLA), setting an Overweight rating and a one-year target price of EUR 22.50.
While Stellantis stands out among European and U.S. Original Equipment Manufacturers (OEMs) regarding profitability, cash generation, dividends, and capital usage, Barclays sees its position as comparatively subdued due to a general disinterest in the European Automotive sector.
Anticipating changes in the sector, Barclays forecasts a margin shift for Stellantis, declining from about 13% to close to 11%. Such an adjustment encompasses the general leveling off of prices across the industry and Stellantis-specific issues, including dilution from Battery Electric Vehicles (BEV) and heightened depreciation and amortization costs.
Barclays highlights that even though Stellantis currently hovers around its peak trading levels, there are ongoing concerns, including uncertainties related to the United Auto Workers (UAW) strike and potential challenges in achieving long-term DF30 volume and market share targets. Nevertheless, Barclays remains optimistic. Even with their deliberately cautious predictions, their estimates are still roughly 10% higher than the general consensus, showcasing a strong earnings outlook.
| Symbol | Price | %chg |
|---|---|---|
| 005387.KS | 164300 | 0 |
| 005389.KS | 159600 | 0 |
| 005380.KS | 267500 | 0 |
| 005385.KS | 161200 | 0 |
Stellantis Started With Underweight at Wells Fargo
Wells Fargo analysts initiated coverage on Stellantis (NYSE:STLA) with an Underweight rating and a price target of €18. The analysts at Wells Fargo expressed concerns in their note about the automotive industry's structural challenges, which they believe are being underestimated by the market.
The report identifies several key factors that could negatively impact the industry in the coming years. These include anticipated price deterioration due to excess capacity in North America and Europe, and changing product mix as Battery Electric Vehicles (BEVs) ramp up to meet regulatory targets. Additionally, they foresee potential headwinds from a decline in high-profit full-size pickups, which could be influenced by weakening trends in housing construction.
Despite these concerns, Stellantis, under CEO Tavares, has shown remarkable performance. The company's adjusted EBIT (Earnings Before Interest and Taxes) in 2022 exceeded €23 billion, a significant increase compared to the combined earnings of its four predecessor companies, which amounted to less than €1 billion in 2002. This success is attributed to Stellantis' stringent cost management policies and platform consolidation.
However, Wells Fargo analysts caution that the expected industry challenges are likely to substantially impact Stellantis' profitability in the near term. These challenges include not only the aforementioned price and mix headwinds but also broader industry shifts, such as the increasing focus on BEVs and the potential decline in pickup truck demand.
