Shares in Aston Martin Lagonda Global Holdings PLC (LSE:AML) are motoring forward after Jefferies upgraded the stock to 'buy' from 'hold' and raised its price target by 26% to 420p.
The broker says it “feels like a new start at AML with net debt stabilized, renewed focus on front-engine cars and sharp average selling price (ASP) upgrades”.
“We expect DB12, refreshed Vantage and new DBS will drive volume and margins, as well as support more Specials,” it added.
M&A interest supports the shares and the brand has room to grow volume and ASPs, it believes.
Jefferies reckons it is starting to close the gap to peers and is an attractive opportunity for a brand that could grow from its low liquidity, small cap status to become a compounder over time.
The broker has nudged its full-year revenue forecast up 3% £1.63 billion on higher ASPs with gross margin of 37.2%, an EBIT loss of £53 million and free cash flow (FCF) outflow of £179 million.
For 2024 it expects gross margin to approach 40%, £65 million EBIT and FCF still slightly negative at £39 million, with upside from working capital as well as potential improvement in cash interest cost.
Shares were marked 4.9% higher at 336.40p.