Stellantis: HSBC analysts cut their target price, here's why

Investing.com – " Weak retail sales and slow destocking in the US suggest 1H24 will be tougher than consensus expects," reads the June 27 report on Stellantis NV (BIT:STLAM) (NYSE:STLA) (BIT ) prepared by HSBC analysts, who have cut the target price on the carmaker's stock from €23.50 to €22 per share.

Stellantis has slimmed down models in recent years

Stellantis' market share losses in the United States and Europe have raised questions about the brand's attractiveness, according to experts. Additionally, in 2023 the group led by CEO Carlos Tavares had to deal with logistical problems and a "lack of the ‘right’ products." However, HSBC points out that "market share losses reflect portfolio optimisation more than brand appeal."

In the past five years, in both regions, " the volume of deleted vehicles is roughly 2x the additions, which might go some way to explaining its industry leading margins. The models that have prevailed have largely held their ground in terms of market share."

New cars to revive the brand in the US and Europe

Stellantis, meanwhile, continues its efforts to reduce costs. However, according to HSBC, " there is a limit to how much cutting can be done. The next earnings growth phase for Stellantis hinges on the success of new product launches (there are many) and the group’s ability to outgrow lacklustre markets in North America and Europe," comment the analysts, who have cut adjusted operating income (AOI) estimates by 5-11% for 2024-26.

"That is the main driver of our lower target price of EUR22.00 (from EUR23.50), which implies c14% upside to the current share price," HSBC emphasizes.

Finally, market experts conclude their analysis of the car manufacturer by saying, "We retain our Hold rating as high US inventories could put pressure on shipments and pricing, while it is tricky to predict the impact of new launches, especially in an environment of model offensives by most carmakers." On the FTSE MIB today at 2 PM, Stellantis' stock is down 3.27% from the €19.342 per share closing price on June 26.

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