The resignation of Carlos Tavaresuntil now CEO of Stellantis, had its impact on the automobile group’s share price. The value started the week with a 7% drop that plunges Stellantis to the lows of July 2022 and puts the focus on the company in a context in which the automobile sector listed in Europe is not going through its best moment. And it is that Stellantis declines three more times so far this year than the average of its competitors.
Compared to the 15% drop in the Msci Europe Automobiles index in 2024, which brings together companies such as BMW or Volkswagen among others, Stellantis has already fallen by more than 45% since January 1. The market was already counting on Tavares’ resignation, but hoped it would be with the finaltion of his contract in 2026 when his departure was formalized. The acceleration of the process due to alleged discrepancies with the board highlights the difficult future of the company.
The European automobile industry is facing falling registrations in the main markets of the euro zone and the weakness of the Chinese economy, which is also affecting collective sales. Furthermore, in the case of Stellantis the evolution of the US market weighs caused the cutting of guides to a margin an operating profit of less than 7% (compared to the double digit previously expected by the company) and a negative cash flow of up to 10,000 million euros (positive data was previously expected).
“After two months, activity in North America, the main cause of the reduction in objectives, cannot be corrected and inventories remain at high levels. All of this increased tension between Tavares and the company’s board of directors,” commented Bankinter. The market consensus outlook collected by FactSet thus cutting the expected net profit for this year up to 40% compared to the forecasts collected at the beginning of the year. Thus, Stellantis would close the year with a net profit of 16.7 billion euros.
In parallel with the cut in expectations, analysis firms adjusted the company’s valuations downwards. Stellantis has a hold recommendation and its worst advice since November 2019, prior to the year of the coronavirus outbreak. Similarly, the consensus of experts established a target price of 27.8 euros per share in April. Today this market objective is on average in the middle, at 14 euros, which At current prices it would imply an upside potential of 22%.
On the other hand, seven analysis firms updated their valuations after the resignation of Carlos Tavares and none of them altered their price targets. Of these new updates, Citi continues to be one of the firms that most adjusts its valuation to the current price. The firm considers that Stellantis should be listed at 12.4 euros per share. “With current OEM valuations, our forecasts leave little room for improvement for the most optimistic investors, despite the marked low performance this year,” commented the investment bank’s expert, Harald C. Hendrikse. The highest target price would be that of JP Morgan, at 17 euros, which would imply a ahead of 48%.
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