For Stellantis, 2022 starts with a shower of positive evaluations. Yesterday the company announced a series of global and multi-year agreements involving Amazon Devices (Alexa-based smart software and devices), Amazon Web Services (cloud solutions) and Amazon Last Mile (urban delivery solutions) to enable it to accelerate the creation of a suite of products and services with software that can be updated over the air, in line with the strategy presented on the occasion of the Software Day last December.
Mobile Drive, the joint venture established in 2021 by Stellantis and Foxconn to develop innovative digital cockpits and customized connected services, will also be used to create the SmartCockpit, operational on millions of vehicles globally starting from 2024. Among the objectives declared at Software Day, there are the capex of 30 billion by 2025 (of which 15-20% for the software strategy), an additional annual turnover of four billion in 2026, with 26 million cars connected, and 20 billion in 2030 with 34 million cars connected. Equita did not include this potential upside in its valuation, but nevertheless confirmed the buy and the target price of € 22.6 on Stellantis.
According to Bestinver Securities, which confirmed the buy rating (target price under review), the news of the agreement is positive as the collaboration with Amazon should accelerate the transition of Stellantis to a sustainable mobility technology company. “We believe that the choice of first-rate technology partners such as Amazon, Foxconn, Waymo, LG, Samsung, should reduce the risk associated with the technological transition in the automotive sector”, said analysts, recalling that “Stellantis plans to invest more than 30 billion by 2025 in electrification and software, while continuing to be the forerunner of automotive efficiency, with an investment efficiency 30% better than the industry average “.
Furthermore, experts believe that for Stellantis, the implementation of synergies is well above expectations, as 40% of the five billion goal set for 2025 could be achieved as early as 2021. This should allow not only to achieve the long-term goal of a double-digit operating margin already this year, but also to confirm it in the coming years despite the increase in costs due to electrification. Bestinver therefore states that “the effectiveness in the execution of synergies demonstrated in the first half of 2021 will contribute to reducing the valuation gap of Stellantis compared to the sector”, evaluating the presentation of the business plan on March 1 as “an important driver of stock performance in the short term “.
Intesa Sanpaolo considers the announcement of the partnership “further confirmation that the company is now running at full speed towards sustainable mobility”. On the basis of its interesting assessment and the proactivity of the group in its electrical and digital transformation, the analysts of Intesa confirmed the buy rating and the target price at 24.1 euros, highlighting that the presentation of the business plan on March 1, during the which the company may also announce potential spin-offs, will have an additional impact on the share price.
Banca Akros was also positive, so the agreement with Amazon “lays the foundations for an accelerated introduction of software services on board Stellantis vehicles”, confirming the buy rating and the target price of 22 euros. Analysts calculate that the stock is currently trading on the market at about five times the expected earnings per share in 2021 (and about 4.6 times that in 2022), which implies a discount of 27-32% compared to its peers, as well as in the range 20.6-8.5 times the expected cash flow in the two-year period 2021-2022, “when the median multiple of the sector is 10-1.3 times”. At the moment the Stellantis stock is up by 0.85% to 18.584 euros. (All rights reserved)

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