1 day Ago
It could be hard for Stellantis to make a rebound after its recent sell-off, according to UBS. Analyst Patrick Hummel downgraded Stellantis to neutral from buy and lowered his 12-month price target from about $18 to roughly $10. His new target suggests about 13% possible upside for the stock, which has plummeted more than 28% over the past month and 32% year to date on tariff concerns.
The analyst is losing confidence in the automaker as auto tariffs remain a risk to global demand, saying that it's "impossible to be confident on U.S. turnaround in an auto tariff world.
" "Without the perspective of a successful U.S. turnaround, a core element to our Buy thesis no longer exists.
After sharp recent underperformance, we think STLA shares already discount this outcome," Hummel said in a note to clients. STLA 1Y mountain Stellantis performance over the past year. Given that 35% of Stellantis vehicles sold in the U.
S. are imported, Hummel said Stellantis has a high chance of seeing earnings losses in its North America business. The company could also get an earnings cut from other regions as tariff and trade policies could slow down global GDP growth, and its free cash flow is likely to be negative this year, he added.
"We believe Stellantis won't likely be a stock to own for cash returns in the foreseeable future. The balance sheet should remain in net cash territory though," Hummel said, adding that the company's aggressive plan to regain market share in a likely shrinking domestic auto market now has a "lower likelihood of success." Looking ahead, the analyst is watching for a new CEO announcement, as well as any reshoring and product-related announcements to regain confidence in the stock.
Stellantis earlier this month said it is pausing production at two of the company's assembly plants in Canada and Mexico. Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today's dynamic financial landscape, access to expert insights is paramount.
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