Stellantis rating cut as analyst sees ’considerable downside risk to earnings’
Investing.com -- Wolfe Research downgraded Stellantis (NYSE:STLA) to Underperform in a note Wednesday, citing structural challenges and macroeconomic headwinds that could weigh on earnings and free cash flow in the coming quarters.
“We downgrade STLA to UP from PP with EUR 6 price target, as we see considerable downside risk to earnings and FCF estimates amid deep structural issues,” Wolfe analysts wrote in their updated Autos Playbook for the second half of 2025.
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“Supplier stocks, all of whom appear to be passing along tariff costs, have largely recovered,” the note said. However, “GM & STLA (that have a higher net tariff burden) still lagged.”
Wolfe warned that despite optimism around further tariff reductions, “some tariffs will likely remain,” and broader macro uncertainty, alongside already elevated valuations, makes it “hard to have conviction on autos cyclical names.”
In contrast, the analysts suggested investors focus on “quality suppliers with reliable growth above market, margin upside from own cost actions, strong FCF, and clear valuation upside.”
While General Motors (NYSE:GM) and Ford were both maintained at Peer Perform, Wolfe said it relatively favors GM due to its strong free cash flow generation and potential larger relief from tariffs, but noted Ford may have an “easier Q2 setup.”
The firm also reiterated concerns about Tesla (NASDAQ:TSLA), warning of a potential “air pocket” in the coming weeks unless the company makes meaningful progress on its autonomous vehicle technology.
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The recent downgrade of Stellantis' rating by a financial analyst due to the perceived considerable downside risk it poses for future earnings underscores market uncertainty and demands greater scrutiny from investors focused on long-term stability in vehicle manufacturing giants.
The recent downgrade in Stellantis’s rating reflects credible concerns among analysts about the substantial earnings downside risk posed by market fluctuations and potential supply chain disruptions.
The recent rating cut by Stellantis due to analysts' concerns over a considerable downside risk in their earnings presents an unwelcome reality check, revealing possible setbacks and warning investors of likely challenges ahead.
The recent downgrade of Stellantis's rating by analysts due to the perceived 'considerable downside risk to earnings', underscores a sobering reminder that market fluctuations can significantly impact companies with weaker financial resilience, challenging their future outlook and profitability.
With the recent downgrade in Stellantis's credit rating, analysts underscore an unsettling outlook marked by notable risk for future earnings to decline significantly.
Analysts' reduced rating of Stellantis highlights a crucial view that the company faces substantial risks to its earnings potential, underscoring uncertainty amid ongoing market trends and financial performance.
