Aston Martin’s expected popularity among retail investors could help drive the luxury carmaker onto the FTSE 100, according to analysts.
The company, best known for making James Bond’s motors, revealed on Wednesday that it plans to list in London later this year, having returned to profitability under chief executive Andy Palmer.
READ: Aston Martin gears up for London IPO
“Aston Martin could be valued at between £4 to £5bn, which would put it at the top end of the FTSE 250 ahead of companies like Travis Perkins and William Hill, and nipping at the heels of FTSE 100 stalwarts like M&S and Royal Mail,” said Hargreaves Lansdown analyst Laith Khalaf.
That’s when it first lists, though. AJ Bell investment director Russ Mould reckons the brand’s popularity could make it a must have for swathes of retail investors, especially if the numbers continue to hold up.
“A very strong brand, a return to profitability and clear momentum with new product innovation would suggest it could command a premium stock market valuation once it joins the market,” said Mould.
Assuming it is valued at £5bn once it joins the London Stock Exchange, that would place it at number 93 on the FTSE 100, ahead of companies such as Royal Mail PLC (LON:RMG) and Direct Line Insurance Group PLC (LON:DLI).
“One would expect the IPO to be very successful and the shares to be in demand from the general public, potentially pushing up its valuation soon after listing and almost certainly securing it a place in the blue-chip index at the next quarterly reshuffle,” Mould adds.
Money talks though
He does caution that it won’t all be plain-sailing for Aston Martin, given that it has gone bankrupt seven times and only returned to profitability in 2017 after racking up years of losses.
That could weigh on investor sentiment and dampen demand, preventing the stock from earning its place on the FTSE 100, unless management can demonstrate that the past year is more than a one-off.
“The brand strength is unquestionable but at the end of the day some investors will only want to get involved if the business can sell more units than it did in the previous year and at a higher price, and continue this trend ad infinitum.”