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Investing.com -- Jefferies slashed its price target on Stellantis (BIT:STLAM) (NYSE:STLA) shares to €11 ($12.70) from €11.50 ($13.20), citing slower-than-expected progress on the company’s turnaround plans.
While analysts kept a Buy rating, they lowered their 2025 adjusted EBIT forecast by 34% to €4.3 billion and expect earnings per share (EPS) to fall to €0.22, down from a prior estimate of €1.32.
“H1 results confirmed that turning around STLA will be neither easy nor immediate,” the team led by Philippe Houchois wrote.
Stellantis management has taken initial steps to address performance in North America, and Jefferies expects stabilization in Europe in the second half.
However, the broker now sees Stellantis’ free cash flow (FCF) recovery as more back-end loaded, with second-half gains unlikely to fully offset the first-half cash burn.
Jefferies described the company’s guidance as “a fairly low bar” and sees limited scope for shareholder returns in 2026, even though Stellantis should end this year with about €11 billion in net industrial cash and €29 billion in gross industrial liquidity.
“We reset 2025 expectations but keep the conviction STLA is approaching a critical inflection point on earnings and CF,” the analysts said.
North America is seen as a key area for potential recovery, driven by “rebased inventories and pricing,” the return of models like the RAM and Cherokee, and tariff adjustments. Still, the region is forecast to break even in 2025, after a negative margin of 3.4% in the first half.
Europe remains more structurally challenged but is expected to return to a 1.9% EBIT margin.
For Latin America, Jefferies expects the region to maintain a strong market share and localized advantages, with margins expected to stay flat at 14% year-over-year.
In contrast, margins in the Middle East and Africa are forecast to decline to 14% due to increased competition.
Shares of Stellantis are trading at 4.5 times projected 2026 earnings, which Jefferies notes still reflect “un-recovered” profitability.
A strategic update is now expected in the first quarter of 2026, slightly later than originally planned, and likely aimed at showing early signs of improvement.