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On Wednesday, Aston Martin Lagonda Global Holdings Plc (AML:LN) (OTC: ARGGY) maintained its Outperform rating and a price target of £2.00, as confirmed by a Bernstein SocGen Group analyst. Despite a significant guidance downgrade earlier in the week, which resulted in a steep decline in Aston Martin's stock prices and indicated another challenging year ahead, the analyst remains optimistic about the luxury carmaker's future.
The downgrade on Monday reflected concerns over Aston Martin's ability to achieve financial independence and positive free cash flow. The analyst noted that the current situation might necessitate another capital injection, estimated between £200-300 million, to bolster the company's liquidity. This move is seen as crucial despite the lack of market credit for Aston Martin's strong model portfolio, which has garnered positive press reviews but has yet to translate into solid financial performance.
Aston Martin's recent stock price drop of more than 20% follows the company's announcement of the downgrade, which has been perceived as more severe compared to other Original Equipment Manufacturers (OEMs). The analyst believes that the company's prospects may improve sooner than expected, potentially with fewer than 9,000 units sold, suggesting an earlier than anticipated inflection point in Aston Martin's financial trajectory.
The analyst's statement highlights the potential for a strong risk-reward scenario for investors who are willing to exercise patience and have an appetite for the inherent risks. The current Outperform rating implies a 67% upside, indicating the analyst's confidence in Aston Martin's ability to overcome its present challenges and capitalize on its "excellent model portfolio."
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