Stellantis: Disappointing earnings, Deutsche Bank cuts rating from Buy to Hold

Investing.com – The stock of Stellantis NV (BIT: STLAM) fell by 10% after missing second-quarter estimates and continues to lose ground on the FTSE MIB Monday, with a -2.49% decline in the early afternoon, bringing the annual performance down by over 25%.

Today's session is also weighed down by the latest update from Deutsche Bank analysts, who decided to cut Stellantis' rating from Buy to Hold, with a target price of EUR 23, down from the previous EUR 35.

In the past, the German bank's experts believed that the automotive group's shares were worth buying "due to the valuation, focus on shareholder returns, and, above all, the strong investor confidence in STLA's execution, which managed the volatility of the automotive cycle better than competitors (with higher margins and free cash flow generation)."

Even though most investors struggled to truly see the long-term "story" or superior brand value, "confidence in the ability to control costs and other key performance indicators was very strong," argue the analysts. "At first glance," they continue, "the 10% margin in the first half suggests that this confidence is still justified. However, Deutsche Bank concludes, "looking at the details, we notice a significant increase in adjustments compared to the previous year (1.8 billion euros or 22% of the total adjusted EBIT), meaning the reported EBIT margin was actually only 7.8% - worse than Renault (EPA:RENA) and probably similar to Volkswagen (ETR:VOWG_p)."