6 days ago
Stellantis dips as BofA downgrades stock on Europe concerns, fears of weak results
-- Stellantis' U.S. shares dipped nearly 5% in premarket trading Monday after Bank of America (BofA) downgraded the stock to Neutral from Buy, citing concerns about its European business and weak upcoming results.
The price objective was also slashed from €16 to €10, as the bank warned it is 'too early for 'bottom-fishing'' despite the sharp decline in the share price this year.
BofA expects a difficult first half (H1) for Stellantis (NYSE:STLA), projecting a 15% year-on-year drop in revenues and a group adjusted EBIT margin of just 2.7%.
'We think consensus estimates will continue to come down after H1 results,' the analysts Horst Schneider and Alexander Jones said, adding they fear both H1 and H2 numbers will disappoint.
Stellantis (NYSE:STLA) is set to report its H1 results on July 29, 2025.
The note flags structural issues in Europe, where Stellantis is seen as poorly positioned in battery electric vehicles (BEV).
Analysts estimate the company must lift its BEV share in Europe from under 10% in 2024 to more than 45% by 2030 to meet regulations, but face cost disadvantages from its multi-energy platform strategy.
Stellantis' market share in Europe has stabilized, but the product mix remains unfavorable, analysts note, with declining sales of profitable light commercial vehicles (LCVs) and rising BEV volumes.
With the company still de-stocking, BofA expects trade payables to be low in Q2 and forecasts an industrial cash burn of about €2.5 billion for the first half of 2025, more than double consensus expectations.
Elsewhere, the bank sees potential for earnings recovery in North America, led by new model launches at Jeep and RAM, but it notes the turnaround will take time and remains cautious.
BofA sees the full-year 2025 (FY25) as 'a year of transition.' For 2025, its adjusted EBIT estimate is about 35% below consensus, and 10% below for 2026.
The Wall Street firm also flagged foreign exchange headwinds from a weaker U.S. dollar and warned that restructuring costs could rise as Stellantis addresses underutilized capacity.
On a more positive note, the group expects limited downside for Stellantis shares, expecting a significant earnings recovery in 2026 (FY26), driven by 13% revenue growth in North America.
This rebound is tied to new model launches at Jeep and RAM, though tariff impacts remain a key uncertainty.
Longer-term, a full model overhaul in 2029 and potential strategic moves—such as brand restructuring or even a group split—could support valuation, with new 2030 targets likely to be presented at a capital markets day in late 2025 or early 2026.
