Key insights
- Jefferies raised its price target for Stellantis (STLA) based on stronger wholesale volumes, leading to increased EBIT estimates. The report also mentions Ford's restructuring and a UBS upgrade, suggesting a generally positive outlook for the automotive sector. However, STLA's current trading price is above InvestingPro's fair value, indicating potential overvaluation. Overall, the news is mildly bullish for the sector.
Investing.com - Jefferies raised its price target on Stellantis NV (NYSE:STLA) to $11.70 from $11.60 while maintaining a Buy rating on the stock.
The firm adjusted its first-quarter estimates to reflect stronger actual unit wholesales, which rose 12% compared to Jefferies’ earlier estimate of 7%. The firm raised its adjusted EBIT estimate by 17% to €840 million on better operating leverage versus the first-quarter figure of €327 million.
Jefferies increased its North America margin estimate to 3% from 1.9% on volume and mix improvements, partially offset by a trimmed Europe margin forecast of 0.9% from 1.7% on mix. The firm also improved its cash burn estimate slightly to €1.2 billion on higher sequential wholesales helping working capital.The stock currently trades at $12.38, below Jefferies’ target but above InvestingPro’s Fair Value of $10.74, suggesting the shares may be overvalued. Analysts remain divided, with price targets ranging from $10 to $18. The company reports earnings in two days.
Stellantis plans to hold a capital markets day on May 20-21 in Auburn Hills. The event is expected to clarify priorities in terms of brands with a focus on Jeep, Ram, Peugeot and Fiat while others become more locally focused.
The company is also expected to address industrial capacity plans between share recovery, third-party manufacturing for Leapmotor and possibly other Chinese brands, and plant closures.
In other recent news, Ford Motor Company announced a significant restructuring, creating a new organization called Product Creation and Industrialization. This new entity combines Ford’s Electric Vehicle, Digital, and Design team with its global Industrial System, aiming to achieve an 8% adjusted EBIT margin by 2029. UBS has upgraded Ford’s stock rating to a Buy, citing a positive earnings outlook, with expectations that Ford could earn more than $2 per share by 2027, surpassing market consensus. The firm maintains a price target of $15.00 for the stock.
Additionally, Ford’s collaboration with Sharrow Engineering has led to a significant reduction in production timelines for the Sharrow Propeller, from 130 days to approximately two weeks, utilizing advanced 3D sand-casting techniques. This partnership demonstrates Ford’s commitment to innovative manufacturing processes. Wolfe Research has identified Ford as having a favorable setup ahead of the Q1 earnings season, despite recent volatility in the auto sector.
Ford’s reorganization efforts have been recognized by UBS, which reiterated a Buy rating based on the company’s efficiency in restructuring its operations. The establishment of the Product Creation and Industrialization organization is a strategic move to integrate product planning and development processes more closely. These developments highlight Ford’s proactive approach in addressing industry challenges and positioning itself for future growth.
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