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Jeffries thinks the stars are aligned for Stellantis (NYSE:STLA) as it keeps a favorable view of the underrated automobile stock.
The firm sees Stellantis (STLA) as one of the most adept legacy OEMs at balancing the industry challenges of profitability, re-investing in electric vehicle and software initiatives, as well as providing cash returns to shareholders.
Analyst Philippe Houchois noted that STLA's methodical approach to electric vehicle platforms yielded EV profitability in Europe and a more timely entry in the U.S next year with the RAM ProMaster and 1500 REV. STLA is seen being unlikely to provide details on the impact from the new United Auto Workers contract impact until full-year results are released next year, but the $750M impact on €3B lost revenue is believed to validate the automaker's relatively low operating leverage.
While Houchois and team are concerned about market share loss and U.S. inventories, the recent trends RAM and Jeep were noted to be favorable.
Jefferies has a Buy rating on Stellantis N.V. (STLA) and price target of $27.25.
"Our estimates look conservative; we keep them unchanged at Group EBIT €24.4/22bn for 2023/24 with margin easing c.1pts next year to 12%. Bsheet strength continues to provide flexibility for opportunities and higher/steadier cash returns.: At PT, F and STLA would trade on 4.3x 24E."
Jefferies has a Buy rating on Stellantis (STLA) and price target of $27.25.
Shares of Stellantis (STLA) tracked lower 0.50% in premarket trading to $21.90.