Stellantis initiated with an Outperform at Wolfe Research

Wolfe Research initiated coverage of Stellantis (STLA) with an Outperform rating and EUR 30 price target. With EBIT margins of about 13% in 2023, or about 12% on a U.S. GAAP basis, Stellantis has become “the most profitable Auto OEM in the world today” with margins that are 500-600 basis points above comparable margins at General Motors (GM), Ford (F) and Volkswagen (VWAGY), the analyst tells investors in a research note. However, and “perhaps more interesting for investors,” the stock’s valuation implicitly suggests that the Street sees their profitability as “aberrational,” though the firm thinks Stellantis “may surprise the Street” with regards to the sustainability of their earnings and free cash flow.