© Reuters. Bernstein upgrades Stellantis (STLA) to Outperform following UAW agreement
Bernstein upgraded Stellantis (NYSE:) to an Outperform rating (From Market-Perform) and raised their 12-month price target on the automotive stock to $26.40 (From $18.50) after the Detroit automaker secured a new labor deal with the United Auto Workers (UAW) union, effectively ending strikes against the company’s facilities.
With UAW discussions (nearly) finished, the incoming CFO is anticipated to offer clearer insights on the company’s policy regarding distribution to shareholders.
Projections indicate a continuation of dividends and buy-backs exceeding €7 billion, with potential for further growth pending favorable shifts in market conditions.
Stellantis is expected to generate more than €22 billion in cash each year, with sustained high spending of around €12 to €13 billion. The company plans to use its existing surplus cash of €25 billion to reduce debt, support pensions, and stabilize working capital.
However, with a slowing macro environment and pricing conditions in the US and Europe, along with an additional €2b of additional labor cost over three years, Bernstein’s forecast is now at the lower end of consensus.
Bernstein cut their earnings forecast by -5% for 2024 and -12% for 2025.
Shares of STLA are up 1.58% in mid-day trading on Wednesday.