Aston Martin Lagonda Global Holdings PLC (LSE:AML), the luxury car manufacturer, could be heading for “a turnaround in fortunes” over the next year and a half as it plans to release a new core model every quarter, a research note by Goldman Sachs (NYSE:GS) said.
Upgrading the London-listed company from a “hold” to a “buy”, the investment group believes the current pipeline is one of the strongest in the group’s history.
This could help provide higher average selling prices (ASP), gross margins and earnings when combined with the release of new special limited edition models like the DBR22 and Valour, Deutsche Bank added.
“On the back of new models, we expect Aston Martin to deliver a second half adjusted EBITDA of €244mln,” the US firm said.
By 2025, the bank reckons Aston Martin’s next-generation products can boost ASPs by 8% and gross margins by 792 basis points.
However, Goldman Sachs (NYSE:GS) warned that in order to convince investors and analysts it can achieve ASPs in line with other luxury peers patience is required.
“We believe it will be necessary to monitor the evolution of waitlists, ASPs and volumes on the new products more than 12 months after their introduction,” the bank said.
Goldman Sachs targets a 413p share price, more than an 18% premium to the 350p value the stock opened on Wednesday at.