Barclays, a major British bank and international giant, has revised its assessment of Stellantis. The banking institution has lowered its rating from “Overweight” to “Equalweight” and reduced the target price from 23 to 12.50 euros. This means that the institution expects the stock to perform in line with or similarly to its recent performance.
Stellantis: North American sales results put pressure on the automotive group
The decision on Stellantis follows the latest profit warning issued by the automaker, which highlighted problems especially in US operations, but also signs of weakness in performance in Europe and other regions of the world. The profit warning, announced a few days ago, prompted Barclays to revise its financial model for Stellantis, taking into account difficulties such as declining market share and price pressures in the States, as well as delays in new model launches and similar difficulties in Europe.
This warning represents a change of direction from previous communications. During the Capital Markets Day last June, CEO Carlos Tavares acknowledged some mistakes, including an overly confident approach and ineffective management of American production in the second half of 2023. However, the company had avoided rebalancing US inventory through price adjustments, a move that proved more problematic than expected.
As of September 23, CFO Natalie Knight was still stating at a public event that Stellantis was aiming for a “double-digit” margin for the second half of 2024. However, the subsequent profit warning signaled a drastic 80% cut in expected EBIT for the same period. Barclays’ downgrade reflects the severity of this turn of events and the sudden downward revision of Stellantis’ financial outlook, which now faces significant challenges and must manage investor expectations in a turbulent market context.
Several financial institutions, including HSBC, RBC Capital, and Piper Sandler, have revised their price targets for Stellantis stock downward. Additionally, Stellantis must deal with the consequences of the dockworkers’ strike at East Coast American ports, which is blocking about half of sea shipments. Despite everything, Stellantis has nonetheless announced a $406 million investment in three Michigan plants to boost electric vehicle production, a sign that the company continues to look to the future.