Stellantis Stock – Stellantis Reports Lower-Than-Expected Revenue and Operating Income for H1

Stellantis Stock – Stellantis, the world’s fourth-largest automaker, has reported revenue and operating profit declines that exceeded expectations in the first half of the year. This downturn is attributed to a challenging industry environment and internal operational issues, particularly in North America, resulting in a significant cash burn during the period.

Significant Drop in Adjusted Operating Income

Stellantis’ adjusted operating income (EBIT) fell by 40% to €8.463 billion ($9.17 billion) for the January-June period. This figure was below analysts’ expectations, which had forecasted EBIT to reach €8.85 billion, according to a Reuters poll. CEO Carlos Tavares acknowledged the shortfall, stating, “The company’s performance in the first half of 2024 fell short of our expectations.”

Margin Shrinks and Cash Flow Concerns

The margin on adjusted EBIT contracted to just below 10%, which is at the lower end of the confirmed full-year forecast for a double-digit margin. Furthermore, Stellantis reported a negative free cash flow of nearly €400 million in the first half. The company’s full-year forecasts still include expectations for positive industrial free cash flow.

Strategic Moves and Future Outlook

In response to these challenges, Stellantis is implementing “decisive actions to address operational issues,” with a particular focus on the North American market, which is critical for the company’s profitability. CFO Natalie Knight highlighted that the market is the most urgent area requiring improvement. She also noted that the launch of 20 new models planned for this year is expected to enhance profitability in the second half.

Knight emphasized, “We are working hard to meet our full-year (adjusted operating income margin) and to deliver positive cash flows in the second half.”

Market Reactions and Analyst Forecasts

Stellantis’ stock has seen notable trading activity. On Wednesday, traders purchased 13,038 put options, marking a 77% increase from the usual volume of 7,382 put options.

Despite the recent challenges, Wall Street analysts have mixed views on Stellantis. Morgan Stanley raised its target price from $26.00 to $30.40, maintaining an “overweight” rating. Sanford C. Bernstein initiated coverage with a “market perform” rating and a target price of $23.50. Barclays upgraded Stellantis to a “strong-buy” rating. Currently, the stock has an average rating of “Moderate Buy” with a target price of $29.55, according to MarketBeat.com.

Stellantis’ first-half results reflect significant operational and market difficulties but also highlight the company’s ongoing strategic adjustments. As the automaker moves forward with its new model launches and addresses its North American market challenges, investors and analysts will closely monitor how these factors impact the company’s performance in the latter half of the year.

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