Aston Martin full-year results: where next for the share price?
The luxury carmaker continues to see its share price struggle, driven lower by profit warnings, sales downgrades and its debt laden balance sheet, with investors growing concerned ahead of its full-year results on Thursday.
Aston Martin Lagonda shares continue to tumble in 2020, with the stock down 32% year-to-date and showing little signs of recovering the losses it has sustained in the near-term.
The luxury carmaker is unlikely to deliver a strong performance in its full-year results, with the stock trading at 365p a share as of 12:15 (GMT) on Tuesday – well below its 2018 IPO price of £19.
In fact, Aston Martin shares continue to underperform the broader market, with the FTSE 250 down 4% year-to-date.
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Analysts from Citigroup reiterate ‘buy’ rating
Despite the carmaker’s share price hitting a new 52-week low, driven by profit warnings, sales downgrades and its debt laden balance sheet, analysts from Citigroup remain optimistic about the stock.
Earlier this month, the US-based investment bank reiterated its ‘buy’ rating for the stock and held on to its 600p target price following Aston Martin’s £500 million capital raise, which analysts said ‘largely removed’ the risks stemming from its Vantage model.
‘With shares discounting circa 12% cost of equity compared to Ferrari at 6% even after a bigger than expected capital raise, we see a highly favourable risk reward profile,’ Citigroup said in a note.
Based on Aston Martin trading at 365p, analysts from Citigroup believe the stock has a potential upside of 64.4%.
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Rescue deal saves Aston Martin from collapse
Last month, the luxury carmaker was rescued from the brink of collapse by a £500 million rescue deal led by Canadian billionaire Lawrence Stroll.
The injection of cash helped strengthen the company’s debt laden balance sheet, which threatened to cause the carmaker to go bust for the eighth time in its 107-year history.
Investors are hoping that the deal will help the company get back on track, but its full-year results on Thursday are expected to disappoint, with the carmaker seeing sales slump and costs increase over the last 12 months of trading.
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