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Investing.com - Citi has reiterated its Neutral rating and EUR9.00 price target on Stellantis NV (NYSE:STLA), citing concerns about the automaker’s near-term recovery prospects. According to InvestingPro data, the stock appears undervalued despite trading at attractive multiples with a P/E ratio of 4.2x and offering a substantial 6.4% dividend yield.
The research firm noted that Stellantis’ first-half 2025 adjusted operating income (AOI) of €0.5 billion, with an additional €3.3 billion in charges outside of AOI, is "sharply lagging any type of consensus AOI recovery."
While Citi acknowledged that Stellantis faces easier shipment, market share, and AOI comparisons in the second half of 2025, the firm expressed uncertainty about the extent of potential AOI margin recovery.
Citi analysts believe a product-led recovery strategy will be insufficient, stating that Stellantis "has to cut capacity and fixed costs much further" to improve performance.
With shares currently discounting approximately €1.50 of earnings per share (representing 5% AOI margins at an 18% tax rate) and free cash flow remaining negative at €3.0 billion, Citi concluded that the stock’s risk-reward profile over the next three to six months "remains at best mixed."
In other recent news, Stellantis reported significantly weaker-than-expected adjusted operating income of €0.5 billion and a negative industrial free cash flow of €3.0 billion for the first half of 2025. The automaker faced challenges from higher industrial costs, geographic and mix factors, foreign exchange issues, and a €0.3 billion impact from U.S. tariffs. Additionally, Stellantis recorded €3.3 billion in pre-tax net charges related to program cancellations and platform impairments. Wolfe Research downgraded Stellantis from Peerperform to Underperform, citing weak fundamentals and concerns about the North American truck business, setting a price target of approximately €6. In contrast, Morgan Stanley (NYSE:MS) maintained an Overweight rating on Stellantis, despite the margin decline. Stellantis has also managed to secure sufficient rare earth supplies amid China’s export restrictions, with temporary export licenses granted to its suppliers. Furthermore, Stellantis announced that its new CEO, Antonio Filosa, will earn a minimum of $4 million annually, potentially rising to $23 million by 2028, as part of efforts to improve performance and regain U.S. market share.
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