©Reuters.HSBC refrains from investing in Stellantis (STLA) as uncertainty threatens growth
HSBC Global Research downgrades Stellantis NV (NYSE:) to Hold (from Buy) and lowers the Detroit automaker's 12-month price target as near-term uncertainty threatens earnings growth. The price was lowered to $22.00 ($24.00).
Looking ahead to 2024, Stellantis' outlook looks more uncertain than ever, prompting a cautious approach from investors. The dichotomy in conversations among investors reflects a split in their views about the company's future. Bulls maintain confidence in Stellantis, citing expected earnings that outperform peers and large cash reserves on the balance sheet, which provide both comfort and strategic options.
Meanwhile, vocal bears foresee an impending catastrophe and are voicing concerns about the ongoing loss of market share as an early warning sign. The broader automotive industry is also facing challenges, making it difficult to paint a positive picture for the near future.
The lack of concrete details leaves the story open to various interpretations, and the bear incident pulls on multiple threads of the storyline to test its resilience. However, a focus on cost reduction has emerged as a key aspect for Stellantis. Amid uncertainty, the company's focus on cost reduction rather than geography, brand, or product provides some reassurance to both analysts and investors regarding the sustainability of its margins.
STLA stock fell 0.54% in pre-market trading Wednesday morning.
