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Stellantis Downgraded: US Turnaround Falters
3 Aug
Summary
- UBS downgraded Stellantis to Neutral due to stalled US recovery.
- Elevated dealer stock necessitates production cuts or incentives.
- Operating income forecasts reduced significantly for 2026 and 2027.
UBS downgraded Stellantis from Buy to Neutral on Monday, expressing concern that its anticipated US recovery has not materialized. Analyst Patrick Hummel noted "too little progress on US turnaround in a healthy sector environment." The automaker is experiencing surprisingly low volume drop-through.
Elevated dealer inventory requires production cuts or higher incentives for the second half of 2026. Additionally, customer adoption of new products has lagged behind previous projections. Growing competition in Europe and other regions further challenges Stellantis's ambitious 2028 business plan targets.
UBS reduced its adjusted operating income forecasts for 2026 by 12% to 18%, projecting 3.0 billion euros with a 1.9% margin. For 2027, forecasts were lowered to 4.7 billion euros and a 2.9% margin. These revisions account for reduced North American performance, planned production cuts, increased incentives, and rising raw material costs in late 2026.
Despite the downgrade, UBS maintained a Neutral rating, not moving to Sell, as North America remains the strongest region competitively. Shares could rally if Stellantis improves volume and market share without significant price impact. The firm lowered its price target to 5.8 euros from 9.5 euros.
