Investing

Why This Analyst Now Sees These 4 Automakers as Poised for Turnaround

Chris Lange

Published: May 10, 2022 11:52 am

Markets were crushed on Monday but making a handy recovery in Tuesday’s session. The recent volatility within the broad markets has investors concerned about which industries could get hurt the worst should recession fears come true. On the other, many are considering which industries have gotten beaten up the most and could stand the most to recover. One Wall Street analyst has some ideas about a winning industry going forward.

Berenberg issued a few calls on Tuesday morning focused on auto manufacturer stocks. While this industry has taken a beating over the past few months, Berenberg’s Adrian Yanoshik thinks this industry is due for a turnaround.

Despite market concerns on demand weakness, supply chain disruption and cost inflation, price-mix strength and “deep” order books can help generate free cash flow and fund transformation of “legacy businesses into the electrified arena,” Yanoshik said in a research note. He expects tight volumes can support pricing through a “modest” recession and says a consumer survey indicates premium segment resilience.

Though headwinds have put a damper on the markets in general, Berenberg believes that a few of these stocks could provide solid upside for now. This industry has been hurt by the recent semiconductor shortage and supply chain issues in general, but it could stand to benefit from a strong summer season.

It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Stellantis N.V. (NYSE: STLA) engages in the manufacturing, distribution and sale of automobiles and light commercial vehicles worldwide. Prominent brands include Alfa Romeo, Chrysler, Dodge, Fiat, Jeep and Maserati. The firm is headquartered in the Netherlands. Berenberg initiated coverage with a Buy rating and a $22.15 price target, which implies upside of 66% from the most recent closing price of $13.30.

Stellantis stock has a 52-week trading range of $13.06 to $21.99, and it traded near $14 a share on Monday. The stock is down about 29% year to date.

On General Motors Co. (NYSE: GM), Berenberg started coverage with a Buy rating and a $55 price target. That implies upside of 44% from the most recent closing price of $38.26. This company builds and sells trucks, crossovers, cars and automobile parts and accessories across the globe. Major brands include Cadillac, Chevrolet and GMC. GM is headquartered in Detroit, Michigan.

The stock was trading at around $39 on Monday, in a 52-week trading range of $37.25 to $67.21. GM stock is down nearly 35% year to date.

Ford Motor Co. (NYSE: F) manufactures, markets and services a range of Ford trucks, cars, sport utility vehicles and luxury vehicles. The firm operates out of Dearborn, Michigan. Berenberg initiated coverage with a Hold rating and a $17 price target, implying upside of 27% from the most recent close at $13.37.

Ford stock has a 52-week trading range of $11.28 to $25.87, and it traded near $13 on Monday. Shares are down about 36% year to date.

Tesla Inc. (NASDAQ: TSLA) is the brainchild of Elon Musk. The firm designs, manufactures and distributes electric vehicles, as well as energy generation and storage systems. Tesla recently moved its headquarters to Austin, Texas. Berenberg started with a Hold rating and a $900 price target, implying upside of 14% from the most recent closing price of $787.11.

The stock traded at around $808 on Monday, and it has a 52-week trading range of $546.98 to $1,243.49. Tesla stock is down 25% year to date.