Trump announces trade deal with EU following months of negotiations
On Wednesday, Barclays (LON:BARC) analyst team downgraded Gestamp, an international supplier of automotive components, from Equalweight to Underweight, adjusting the price target to €2.50 from the previous €3.00. The downgrade was prompted by Gestamp’s perceived lack of progress in its North American operations and the potential risks posed by increasing US/Mexico tariffs.
Gestamp has been working on a turnaround plan, referred to as the Phoenix plan, aimed at improving its free cash flow generation and balance sheet. However, the company’s efforts have not met expectations, especially in the context of a favorable light vehicle production (LVP) environment in North America prior to the introduction of tariffs. The threat of escalating tariffs between the US and Mexico adds further uncertainty, potentially impacting Gestamp’s plans to shut down Edscha production capacities in the US and relocate them to Mexico.
The analysts at Barclays highlighted that the increasing uncertainty is unwelcome and raises additional concerns about Gestamp’s equity story. This is particularly relevant as the company continues to ramp up investment related to electric vehicles (EVs). With 2025 anticipated to be another transitional year for Gestamp, Barclays sees increasing downside risks to the current consensus expectations for the company’s earnings and cash flow.
Moreover, when compared to its direct peers, Gestamp’s relative valuation was found to be unattractive, leading to the decision to downgrade the stock. The new price target of €2.50 reflects Barclays’ revised estimates for the company’s future earnings and cash flow.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.