Aston Martin Lagonda Global Holdings PLC (LON:AML) revved higher on Tuesday after analysts at Jefferies upgraded their recommendation for the luxury carmaker, while Goldman Sachs kept its ‘buy’ rating in place.
Having previously been a bear of the stock, Jefferies is now on the side-lines, upping its recommendation to ‘hold’ from ‘underperform’. The number crunchers also lifted their price target by 50p to 1,050p.
Goldman, on the other hand, remains bullish, although it did cut its target down to 1,500p from 2,080p.
Still, when the shares are trading at 971.5p, a 3.6% gain for the day, Goldman’s punchy target implies upside of some 60%.
Both investment banks picked out the launch of the DBX – Aston Martin’s first luxury SUV – as key to the company’s investment case over the coming 12 months or so.
“The DBX is, without doubt, the most important model for Aston Martin in over a decade and a critical part of the equity story,” said Goldman in a research note.
The analysts point out that Aston is looking to ship around 5,000 DBXs in 2021, compared with just 6,400 across all vehicle lines in 2018.
‘Bumper year’ in 2020
“Not only is this [unit growth] positive in its own right but if the DBX is able to attract new customers to AM, we could see those customers also pay more attention to AM’s GT and sports cars.”
They added: “We do not believe a successful DBX launch plus any subsequent increased awareness and interest in the brand is priced into the stock today.”
Jefferies’ chin scratchers agreed with some of that sentiment, stating that the launch of the DBX should help Aston to a “bumper year” in 2020, allowing the company to outperform most of its peers.
“But these [operating drivers] are fairly reflected in multiples considering execution risk and profit lumpiness,” they added.