Analysts acknowledge that the situation looks even worse than their previous estimates, which were already well below consensus. In particular, the Retail sales in the United States are in worrying contraction, at -10% in the first quarter and -26% in April, adding to long-standing market concerns about very high inventories in the United States. Indeed, CFO Natalie Knight dismissed questions about a short-term reduction in US inventories in the analyst call, and instead suggested that US inventories should continue to rise in line with shipments (and April data suggests this in effects).
Barclays highlights that the collapse of Stellantis shares (-10% in one session) happened in a “Black Tuesday” for European car manufacturerswhen also Mercedes-Benz Group And Volkswagen missed market expectations for their first quarter results. So, after a strong relative and absolute performance by Stellantis in 2023 and year-to-date, and a placement probably quite crowded given 1) the solid execution track record, 2) very popular CEO, 3) relatively clean governance, 4) strong financials, 5) strong TSR, 6) no exposure to China, and 7) maximum exposure of European OEMs to the pool of probably more desirable and less disruptive profits made up of US SUVs and pick-ups, “the fall from grace has been very harsh and – in our opinion – too severe”, the research reads.
The investment bank has cut earnings estimates by 7-10%, starting from a position already well below consensus. Therefore, with a lower market share and more negative pricing assumptions, the new estimates now appear clearly less risky and well aligned with Stellantis’ updated guidance.
“We recognize the substantial disruption in momentum and change in sentiment – and agree that this was partially justified – but now consider the current levels as a good entry point to re-engage with the story – which retains many desirable structural qualities as outlined above (despite a larger than expected transition in 2024).”
(Teleborsa) 03-05-2024 10:26
