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## Stellantis Shares Present Buying Opportunity, Says Bank of America
Bank of America analyst Michael Jacks has upgraded Stellantis shares to buy from neutral, citing a buying opportunity for investors as the automaker navigates the transition to electric vehicles (EVs). He also raised his price target for the Netherlands-based automaker. While acknowledging the challenges ahead for Stellantis as it, along with other EU automakers, meets the region's climate requirements and faces competition from China, Jacks pointed out several advantages for Stellantis. These include its significant exposure to North America, low exposure to China, and strategic EV strategy. Despite potential risks, Jacks believes Stellantis is well-positioned to weather the storm.
### Positive Factors for Stellantis
According to Jacks, there are five key reasons why Stellantis should successfully navigate the current challenges. Firstly, its largest profit pool, North America, benefits from the Inflation Reduction Act. Secondly, expected merger synergies and cost reductions will further support earnings. Thirdly, Stellantis has low exposure to China compared to its peers, reducing dependency on the market. Fourthly, the company's EV strategy allows for maximum flexibility with its platform and batteries. Finally, Stellantis' management is aware of the risks and focused on cost reductions.
### Outlook and Price Target
Jacks raised his price objective for Stellantis' U.S.-listed shares to $21.95 per share from $20.83 per share. This new target implies a 22% upside from the previous day's closing price. Despite already posting a 26% gain this year, the stock rose an additional 1.8% in premarket trading following the upgrade. Jacks believes that Stellantis has already seen a significant de-rating and that the market is pricing in worse scenarios, suggesting that the company is well-positioned to handle the challenges ahead.
## Conclusion: An Opportunity for New Businesses in the EV Market
The recent analysis by Bank of America regarding Stellantis and its transition to electric vehicles presents an interesting opportunity for new businesses in the automotive industry. As Stellantis focuses on navigating the challenges posed by the shift to EVs, there are several positive factors that can be leveraged by emerging companies seeking to make an impact in this market.
One key advantage for new businesses is Stellantis' significant exposure to the North American market. The implementation of the Inflation Reduction Act in this region provides a favorable environment for profitability, making it an attractive target market for startups. Additionally, Stellantis' low exposure to China mitigates dependency on a highly competitive market, creating space for new players to establish their presence without the intensity of Chinese competition.
Furthermore, Stellantis' strategic EV strategy, which includes a flexible platform and battery options, presents opportunities for collaboration and partnership with innovative startups. New businesses with cutting-edge EV technologies or novel approaches to battery development can potentially align with Stellantis to leverage their resources and expertise.
Overall, the positive outlook for Stellantis, as highlighted by Bank of America, suggests that the company is well-positioned to handle the challenges ahead. This creates a conducive environment for new businesses to enter the market and potentially collaborate with Stellantis or compete in specific niche areas.
While venturing into the automotive industry can be daunting, the current landscape presents a unique opportunity for startups to make an impact in the EV market. By capitalizing on Stellantis' strategic advantages and aligning with their goals, new businesses can position themselves for growth and success in this evolving industry.
Article First Published at: https://www.cnbc.com/2023/07/12/this-automaker-can-navigate-the-ev-transition-better-than-investors-think-bank-of-america-says.html
