British luxury carmaker Aston Martin Lagonda Global Holdings PLC (LSE:AML) got a mixed report card from US bank Jefferies on Monday, including raising worries on a long-held issue of succession plans.
On the bright side, analysts were pleased with the carmakers' debt refinancing operations, which “stabilises liquidity and provides more time for execution”.
“Progress is slower and data more mixed than we would like but (Aston Martin) is still moving in the right direction,” said Jefferies of the balance sheet.
But Jefferies voiced trepidation over Aston Martin’s succession plans.
“Governance remains a concern as we fear that Mr (Lawrence) Stroll's executive chairman position, a sub-optimal situation for a plc, could make it difficult to attract the right executive leadership to succeed CEO Amedeo Felisa, who is due to retire,” said the bank.
Felisa announced his departure from Aston Martin in February, meaning the carmaker is poised to hire its fourth boss in as many years.
Aston Martin has had trouble retaining their captain: Felisa’s predecessor Tobias Moers lasted less than two years, while Andy Palmer before him left in a matter of months.
On the valuation front, Jefferies' outlook remains optimistic, underpinned by Aston Martin's rare blend of exclusivity, heritage, and potential for mergers and acquisitions (M&A) activity.
The firm's valuation reflects confidence in the luxury automaker's attributes but acknowledges the challenges in achieving a faster pace of deleveraging.
Analysts maintained a 'buy' rating on the stock, though adjusted their price target to 275p from the previous 330p.
Despite succession concerns and reduced target, this still represents a 60% upside to Aston Martin’s current share price.