Analysts at HSBC upgraded their recommendation for shares of Aston Martin, hailing the arrival at the firm of chairman Lawrence Stroll and its new chief executive officer Tobias Moers.
In their view, the ‘buzz’ now apparent around the sports car maker was justified.
Regarding the latter, they highlighted that he brought with him a “hands-on attitude, experience and strong relationships.”
Indeed, Moers previous employer, AMG, was now Aston’s key technology partner and shareholder.
To Moers’s credit, said the analysts, he had brought a sense of realism to the company, having already identified approximately 30% of savings potential.
He had also replaced a previous target for production volumes of 13-14,000 in 2024/5 with “a more credible” 9-10,000 units, for roughly £2.0bn in sales and earnings before interest, taxes, depreciation and amortisation of about £500m.
Key of course was that the DBX SUV was selling “very well” thus far.
They also judged the brand to be strong enough to overcome the heavy discounting that had been needed to right-size dealers’ inventory levels.
Nevertheless, the shares were already trading on an implied price-to-earnings multiple for 2024/5 of 25 times profits.
That, they argued, was “too much to justify material upside in our opinion, especially given the significant execution risk and AML’s bad track record.”
“High risk, high reward: upgrade to Buy (from Hold). TP GBPp2,750. AML is not “another Ferrari” today and it won’t be in 2026 either.
“ASPs, mix and wait lists are structurally lower, but EBITDA margin can be c30% at steady-state of c12,000 cars/year in our view.”
