Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.
Despite continued US import tariff uncertainty looming over European automakers, we update our fair value estimates to reflect the average of several tariff outcomes. We also revise some of our long-term assumptions for Stellantis STLA as we roll our model off its lower 2024 base.
Why it matters: We have reduced Stellantis’ fair value estimate by 26% to EUR 14 and increased our Uncertainty Rating to Very High from High. The effect of US import tariffs explains the decrease in our fair value estimate.
We weigh four tariff scenarios equally: the 25% tariff remains in place until the end of 2025, the end of 2026, from 2026 until the end of President Donald Trump’s current term, or indefinitely. The first and final scenarios result in a reduction in our fair value estimate by mid-single digits and high-teen percentages.Rolling our model creates a lower volume base across most regions. We do not believe the market share losses in key regions are fully recoverable, despite an almost complete product range from the second half of 2025.
The bottom line: Despite the downward revisions, Stellantis continues to trade at a deep discount. Given heightened uncertainty over the company’s leadership, its plan to regain share losses, and how it will adjust operations in response to tariffs, we believe the discount will remain over the near term.
We expect a substantial decline in US vehicle sales in 2025. The potential halt in exports from Europe and Mexico to the US may reduce global capacity utilization or result in excess supply. Both will hit operating margins.We raise investment spending as Stellantis attempts to fight for share gains. For example, we highlight how French-based Citroën and Peugeot and German-based Opel have seen far higher market share losses in France and Germany, respectively, versus other French- and German-based brands.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.