Aston Martin Lagonda Global Holdings PLC’s (GB:AML) shares have recently garnered considerable attention from investors and analysts, with notable news surrounding the company. Following the release of favorable results earlier this month, Aston Martin announced yesterday that it had secured an investment from Chinese company Geely.
The shares jumped around 13% on Thursday after a £234 million investment by China’s Geely Automobile Holdings. Overall, the shares have surged by 102.5% over the last six months as the renowned carmaker witnessed huge demand across its product range.
However, analysts have a Neutral outlook on the stock and expect some downside in the share price.
Let’s take a look at some details.
The New Investment
Geely has entered into an agreement to purchase approximately 42 million ordinary shares at a price of 335 pence per share. Additionally, Geely will also subscribe for another 28 million shares at the same price, generating around £95 million in cash for the company.
After acquiring a 7.6% stake in Aston Martin through a previous deal in September, Geely has now increased its ownership to 17%, positioning the Chinese automaker as the third largest shareholder in the company. The investment not only provides Aston Martin with a pathway to ensure its long-term sustainability but also enables the reduction of its net debt, which amounted to £868.1 million at the end of March 2023.
Geely’s Chairman Eric Li commented on the deal, “Our decision to increase our shareholding in Aston Martin reflects our confidence in the company’s growth prospects, its technologies, and its management team.”
Q1 Results and Analysts’ Opinion
Recently, the company announced its Q1 2023 earnings and maintained its full-year outlook. The company was able to reduce its quarterly losses to £74.2 million, down from £111.6 million a year ago. Revenues grew by 27% to £295.9 million in the quarter. The numbers were driven by higher sales of the sport utility vehicle DBX coupled with improved pricing. The company expects its profitability to improve in 2023, as it anticipates the commencement of deliveries for its next-generation sports cars in the third quarter.
In general, analysts hold a neutral perspective on the company’s stock, taking into account the impact of high inflationary pressures on profits. Moreover, they believe the stock has rallied a bit too much and remains overvalued.
Yesterday, an analyst from HSBC reiterated the Hold rating on the stock, implying a 25% downside in the share price.
15 days ago, Kepler Capital’s analyst Thomas Besson reiterated his Sell rating on the stock, predicting a decline of 42.4% in the share price.
What is the Price Target for Aston Martin?
According to TipRanks’ rating consensus, AML stock has a Hold rating. The projected average price for the stock is 209.17p, indicating a downside of 21.25% from the current level.
The Bottom Line
Currently, analysts have assigned a Hold rating to the stock. However, the potential for further upside may be confirmed if the stock surpasses the 300p level.
