RE: Broker rating17 Jun 2024 15:04
Jefferies, the US investment bank, notes that luxury car maker's Q2 earnings are expected to mirror Q1, leading management to draw down recently expanded credit lines to maintain liquidity.
Initial feedback on AML's new products has been positive, and lean dealer inventories have created a supportive environment for ramping up the latest models.
However, Jefferies has trimmed its earnings before interest, taxes, depreciation, and amortisation (EBITDA) forecast by 6% to £388 million, free cash flow (FCF) to negative £81 million, and the price target to 250 pence from 275 pence.
The company’s debt refinancing has bought some time to navigate through another weak quarter as guided.
Despite the supportive environment for new models, recent weakness in high-end car market demand raises concerns, Jefferies said.
Aston Martin's volume ambitions are ambitious but achievable within its historical volumes. The main concern remains the company's ability to ramp up production to approximately 5,000 units in the second half of the year, considering past quarterly outputs have not exceeded 2,500 units.
For Q2, Jefferies estimates Aston Martin will produce 1,010 units, generating revenue of £270 million, with an EBITDA of £24.6 million, reflecting a 9.1% margin. Adjusted EBIT is expected to be negative £69 million, with FCF at negative £125 million, and net debt at £1,170 million.
Looking ahead to the full year 2024, Jefferies has adjusted its volume forecast down by 2.5% to 7,075 units, revenue down 5% to £1.73 billion, and EBITDA down 6% to £388 million, reflecting a 22.4% margin.
Adjusted EBIT is projected to return to negative territory at £14 million, with FCF at negative £82 million, and net debt ending at £990 million.
In afternoon trading, the shares were off 4% at 140.4p.
https://www.proactiveinvestors.co.uk/companies/news/1049964/aston-martin-price-target-cut-estimates-tweaked-by-us-investment-bank-here-s-why-1049964.html
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