On Thursday, BofA Securities adjusted its stance on Aston Martin Lagonda Global Holdings Plc (AML:LN) (OTC: ARGGY) stock, shifting from a 'Buy' to a 'Neutral' rating. The firm also reduced the luxury carmaker's price target to GBP115.00 from the previous GBP200.00. The downgrade follows Aston Martin's unexpected revision of its financial year 2024 (FY24) guidance, which anticipates lower sales, reduced EBITDA, and continued cash burn in the second half of 2024.
The analyst from BofA Securities noted that the updated guidance came as a surprise, highlighting several factors contributing to the less optimistic outlook. A key reason for the revision is the weakening market in China, which accounted for approximately 10% of Aston Martin's unit sales in 2023. Additionally, the late start of deliveries for the new Vantage and DBX facelift in the third quarter, due to supply shortages, has impacted the company's performance.
The report further explains that while Aston Martin could have attempted a strong sales push in the fourth quarter of 2024 to counterbalance the late deliveries, this strategy would likely result in high dealer inventories at the end of the year. Such an outcome could negatively affect sales volumes and prices in the following fiscal year, 2025. Despite these challenges, the new guidance still suggests some level of sales push in the last quarter of 2024.
BofA Securities' revised estimates for the second half and the full year of 2024 are now aligned with Aston Martin's guidance and the consensus. The downgrade reflects the investment firm's recalibrated expectations based on the latest information provided by the luxury automaker regarding its future financial performance.
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