Stellantis: Corrective Action in North America Larger Than Expected; Reduce Fair Value to EUR 28.50

Stellantis has significantly reduced the outlook for its full-year results, now expecting its adjusted operating income margin to be between 5.5% and 7.0% versus prior guidance of double-digit margins. While we believed that its double-digit margin target was too challenging to achieve, we underestimated the extent of the miss. Despite keeping our forecasts from 2025 onward largely unchanged the free cash flow turnaround, so far in 2024 alone, from around EUR 500 million to more than negative EUR 6 billion, is meaningful to our fair value estimates. Thus, we reduce our fair value estimates to EUR 28.50 per share/$31 per ADR from EUR 32 per share/$34.50 per ADR.