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Investing.com -- Jefferies upgraded Stellantis (BIT:STLAM) to “buy” from “hold” with a new price target of €11.50, up from €9, citing signs of a turnaround in earnings and strategy under new CEO Antonio Filosa.
Shares rose over 4% on Wednesday following the upgrade, which implies a 44% upside from the current share price of €8.01.
Jefferies analysts said Stellantis is showing early signs of operational recovery after a prolonged decline in margins and market share.
Key improvements include easing product launch delays in Europe and progress in repositioning models like the Ram Express in North America, which had been heavily impacted by inventory destocking and misaligned pricing.
Jefferies described the first half of 2025 as the low point in earnings, projecting adjusted EBIT at €6.5 billion for the year, down from €8.6 billion in 2024.
Earnings per share are forecast to fall to €1.32 in 2025 before rebounding to €2.40 in 2026 and €3.13 in 2027.
Free cash flow is expected to recover to €1.5 billion in 2025 and reach €5–6 billion annually in subsequent years.
The analysts expect Stellantis to operate within a 6–8% margin range over time, aided by product mix shifts and brand rationalization.
In North America, 2025 EBIT margin is forecast at 2.6%, with expectations of reaching 5% in the second half of the year as new model launches and pricing adjustments take effect.
In Europe, margins are projected at 3.8% for the full year, improving on stabilized volumes and better fixed-cost absorption.
Filosa, who took over as CEO on June 23, has cut the executive team to 16 direct reports from over 30, which Jefferies said should allow for faster execution.
Filosa retains oversight of the North American business and has made internal appointments that balance legacy PSA and FCA leadership.
Jefferies noted Stellantis’ low valuation, trading at 4.4x 2026 estimated earnings and 0.08x EV/sales.
The brokerage said the stock’s 70% decline from peak levels and 38% drop from the merger price suggests investor expectations are low, creating potential for re-rating.
The firm acknowledged risks, including restructuring costs, estimated at €500 million annually through 2027, and uncertainties around U.S. tariffs and brand consolidation.
Still, Stellantis’ liquidity position remains strong with net cash of €15.1 billion as of year-end 2024.
Jefferies also flagged Stellantis’ progress in EV platform development and alliances with Leapmotor (HK:9863) and CATL.
Upcoming launches, including the Jeep Cherokee, Fiat Grande Panda, and Dodge Charger, are expected to account for over 25% of group volume through 2027.