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JP Morgan lets some air out of Aston Martin's tyres as it predicts pricing pressure and "softening" demand

In a note, the US investment bank said the car maker's pricing power for its lower-cost vehicles could come under pressure in its 2019 fiscal year, which could affect as much as 15% of its sales

Aston Martin
The bank also cut its earnings forecasts for Aston's full year by 10%

Shares in Aston Martin Lagonda Global Holdings PLC (LON:AML) skidded in late-afternoon after JP Morgan cut its target price to 1,500p from 1,800p.

In a note, the US investment bank said the car maker's pricing power for its lower-cost vehicles could come under pressure in its 2019 fiscal year, which could affect as much as 15% of its sales.

READ: Aston Martin ‘more like BMW than Ferrari’ according to Deutsche Bank

Analysts also highlighted a “softening” of demand for premium models across Europe, citing low-single digit declines over the last five months as opposed to four years of “straight line growth” since 2015.

The bank also forecast that a lack of output in the first quarter from the group’s DBX luxury SUV model as well as higher depletion and amortisation (D&A), would “take a toll” on its first quarter results, and as such cut their earnings forecasts for the full year by 10%.

JP Morgan’s analysts aren’t the only ones expecting lower earnings from Aston Martin, with Deutsche Bank saying they saw a “risk to earnings in 2019” as a result of “muted demand momentum” and increasing costs due to ramp-ups at the company’s St Athan manufacturing plant.

Shares were down 0.6% at 931.4p.

Quick facts: Aston Martin Lagonda Global Holdings PLC

Price: 55.15 GBX

LSE:AML
Market: LSE
Market Cap: £838.29 m
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