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Investing.com - Wolfe Research downgraded Stellantis NV (NYSE:STLA) from Peerperform to Underperform on Wednesday, citing weak fundamentals and concerns about the company’s North American truck business. The $29.7 billion market cap automaker, currently trading at $10.22, has seen its stock decline by nearly 45% over the past year, according to InvestingPro data.
The downgrade comes with a price target of approximately €6, suggesting a potential 30% downside from Tuesday’s closing price. Wolfe Research applied a 5x price-to-earnings multiple to its 2026 earnings per share estimate of €1.15 to arrive at this target. Currently, Stellantis trades at a P/E ratio of 4.7x and offers a significant 5.8% dividend yield.
Wolfe Research acknowledged that Stellantis stock could experience choppy trading in the near term and might temporarily rise on any tariff relief announcements. However, the firm believes such increases would likely be short-lived as additional sellers enter the market due to underlying fundamental weaknesses.
The research firm noted that the 5x P/E multiple assigned to Stellantis is in line with General Motors (NYSE:GM), despite GM’s stronger free cash flow profile and accounting differences between IFRS and GAAP standards that benefit Stellantis’s multiple.
Wolfe Research indicated that its bearish outlook could prove incorrect if Stellantis’s new CEO and management team can develop and execute a credible turnaround plan for the North American truck business, though it cautioned that such efforts would require time and face substantial execution risks.
In other recent news, Stellantis has announced that it is not currently experiencing supply bottlenecks for rare earth materials from China, despite new export restrictions imposed by Beijing. This development is significant as China controls over 90% of the global processing capacity for rare earths, which are crucial for automotive manufacturing. Additionally, China has granted temporary export licenses to rare-earth suppliers for Stellantis and other major U.S. automakers, providing some relief amid ongoing supply chain challenges.
In terms of leadership changes, Stellantis has appointed Antonio Filosa as its new CEO, with a compensation package that could reach up to $23 million annually by 2028, depending on performance. Filosa will focus on improving the company’s performance and regaining market share in the U.S. Meanwhile, Sébastien Jacquet has been named as the new Chief Quality Officer, taking over from Filosa. Jacquet brings extensive experience in quality and engineering, underscoring Stellantis’s commitment to innovation.
These leadership transitions are part of Stellantis’s broader strategy to enhance its market position and operational efficiency. Despite the pressures from rare earth supply constraints, Stellantis reports that it has managed to address immediate production concerns without major disruptions. The company’s proactive measures with its suppliers aim to ensure an efficient licensing process, indicating a focus on maintaining stable production levels.
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