Stellantis Shares Slide After BofA Downgrade Over Europe Worries

Stellantis (NYSE: STLA) shares slipped nearly 5% in premarket trading Monday after Bank of America (BofA) downgraded the auto giant’s stock from Buy to Neutral, citing mounting issues in Europe and fears of disappointing financial results. The bank also cut its price target dramatically—from €16 to €10, which translates to a drop from $17.25 to $10.78 USD.

According to BofA analysts Horst Schneider and Alexander Jones, Stellantis is heading into a rocky first half of 2025, projecting a 15% year-over-year drop in revenues and a group adjusted EBIT margin of just 2.7%.

“We think consensus estimates will continue to come down after H1 results,” they noted, warning that both the first and second halves of the year are likely to disappoint.

BEV Struggles in Europe – 

BofA sees structural weaknesses in Europe, where Stellantis is trailing competitors in battery electric vehicle (BEV) adoption. The analysts point out that Stellantis’ BEV market share in Europe was below 10% in 2024, and will need to rise to over 45% by 2030 to meet environmental regulations.

But the company’s multi-energy platform strategy—which mixes internal combustion, hybrid, and electric powertrains on the same platforms—is causing cost disadvantages. Combined with a weak product mix and falling sales of high-margin light commercial vehicles (LCVs), this leaves Stellantis in a tough spot.

Cash Burn and More Restructuring? – 

Stellantis is still actively reducing inventory, which is expected to drag down trade payables in Q2. BofA forecasts an industrial cash burn of around €2.5 billion ($2.7 billion USD) in the first half of 2025—more than double Wall Street expectations.

The analysts also noted that restructuring costs may rise, especially as the company continues to deal with underused factories in Europe.

North America Offers Some Hope – 

There is a silver lining. BofA sees a chance for a recovery in North America, led by upcoming product launches from Jeep® and RAM. However, they caution that the turnaround won’t happen overnight and are labeling 2025 as a “year of transition.”

Their full-year 2025 EBIT forecast is 35% below consensus, and their 2026 projection sits 10% below market expectations.

Currency pressures could also complicate things. A weaker U.S. dollar is expected to work against Stellantis’ financial performance.

Looking Ahead to 2026 and Beyond – 

BofA believes Stellantis could see a strong rebound in 2026, especially in North America, where they project 13% revenue growth—driven by refreshed lineups from Jeep and RAM. That said, tariff impacts remain an unknown.

Looking even further down the road, a complete model overhaul in 2029 or even strategic restructuring—possibly splitting brands or segments—could help lift valuation. The company is expected to present new 2030 targets at a capital markets day later in 2025 or early 2026.

Source: Investing.com