Tariff Risks, Costly EVs, And Leadership Gaps Weigh Heavy On Stellantis

Core Viewpoint - Piper Sandler analyst Alexander Potter downgraded Stellantis NV from Overweight to Neutral and reduced the price forecast from $23 to $13 due to ongoing challenges facing the company [1][2]. Group 1: Financial Performance - Stellantis is expected to face lower-than-expected margins, with a predicted adjusted operating margin of 5% in 2025 [2]. - The new price forecast of $13 is based on a multiple of 4.5x the estimated EPS of €2.75 for 2026, with an exchange rate of USD/EUR at 1.088 [4]. Group 2: Leadership and Strategy - The company is experiencing a leadership vacuum without a CEO, which raises concerns about its strategic direction [3]. - Ongoing tariff risks and pressures from its electric vehicle strategy are additional challenges that could impact performance [3]. Group 3: Market Position and Product Offerings - While product launches may help mitigate market share declines in 2025, Stellantis' electric vehicle offerings are viewed as too expensive, particularly in the U.S. and Europe, potentially hurting margins [3]. - A favorable resolution of trade issues could provide Stellantis with a competitive advantage over other automakers [4]. Group 4: Risks and Market Reaction - The analyst highlighted risks such as volatile material prices, supply chain disruptions, and labor conflicts that could affect future performance [5]. - Following the downgrade, Stellantis shares traded lower by 3.47% at $12.23 [5].