Stellantis shares slide as Morgan Stanley cuts rating to Underweight, while the firm upgrades Renault and maintains bullish stances on German luxury automakers Mercedes-Benz and BMW.
Morgan Stanley downgraded Stellantis to Underweight and cut price target to $5.20, citing lagging product pipeline and cash generation concerns.
Morgan Stanley upgraded Renault to Equal Weight, citing exposure to European market and potential regulatory measures on Chinese imports.
Morgan Stanley maintained Overweight on Mercedes-Benz and raised price target, remaining preferred stock in sector.
Morgan Stanley maintained Overweight on BMW and raised price target.
Morgan Stanley maintained Underweight rating on Porsche.
Morgan Stanley maintained Equal Weight on Volkswagen but raised price target to €89.
Morgan Stanley downgraded Stellantis to Underweight, citing a lagging product pipeline and declining cash generation, which sent shares down over 2%. Conversely, the firm upgraded Renault to Equal Weight and raised price targets for Mercedes-Benz and BMW, signaling a more optimistic outlook for the broader European automotive sector as cyclical margin pressures begin to ease.
The downgrade reflects concerns over a lagging product pipeline, rising inventory levels, and declining cash generation capabilities compared to industry peers.
Morgan Stanley suggests the sector has passed its cyclical margin bottom, supported by restructuring efforts and improved cost management, leading to higher earnings estimates for 2026 and 2027.