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- Bernstein has upgraded Stellantis (NYSE:STLA) to outperform from market perform following the tentative agreement reached with the United Auto Workers recently and growth opportunities.
- The firm has raised its price target to $26.40 from $18.50 (~41% return based on Tuesday's close).
- Analyst Daniel Roeska noted that the carmaker has "unique regional exposure" and opportunities for growth that will "help deliver more than €10b underlying annual [free cash flow] in '24 and '25."
- However, due to the new tentative labor contract, he is lowering his earnings forecast by 5% for 2024 and 12% for 2025.
"Stellantis' [STLA] business can sustainably generate more than €22b cash from operations annually," Roeska wrote. "Stellantis' strategy also calls for reducing debt, funding pensions, and normalizing working capital -- but we expect these measures to be funded from the company's existing €25B excess cash resources."
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