On Thursday, Jefferies downgraded Aston Martin Lagonda Global Holdings Plc (AML:LN) (OTC: ARGGY) stock, moving the rating from Buy to Hold and adjusting the price target to £1.20 from the previous £2.50. The firm cited the new CEO's challenging guidance reset and the tight financial situation as the primary reasons for the downgrade.
The recent statements by CEO Adrian Hallmark, his first public move since taking the helm, were highlighted as not shying away from making difficult decisions to recalibrate the company's ambitious guidance. This move comes after Aston Martin secured an additional £135 million in liquidity in early August, which is expected to cover the increased cash burn but leaves little margin for error.
Jefferies revised their 2024 adjusted EBITDA estimate for Aston Martin down by 28% to £279 million and increased the forecast for cash outflow by more than three times to £424 million. This adjustment is anticipated to bring year-end net debt to a substantial £1.4 billion.
The firm expressed concerns over Aston Martin's financial outlook, indicating challenges in envisioning a scenario where the company would not need to seek additional equity. This outlook reflects the analyst's view on the potential financial risks faced by the luxury car manufacturer in the near future.
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