Aston Martin Lagonda Global Holdings PLC (LON:AML) has had its target price cut to 35p from 40p by Deutsche Bank as analysts forecast a bleak set of second quarter figures from the luxury carmaker which are due on July 29.
In a note on Friday, Deutsche also retained its ‘hold’ rating on the stock, saying a trading update issued by the FTSE 250 group last week had confirmed that its second quarter “will be difficult” and they expected wholesale volumes to “drop on the back of dealer closures, late reopening and also inventory clearing”.
As a result, the bank predicted that losses “should come in slightly above £80mln” alongside negative free cash flow due to a forecast cash burn of £350mln for the quarter.
Analysts said this was “not surprising as the whole industry will be hit” by the pandemic disruption.
Looking ahead, Deutsche said they will “not expect a very precise guidance of the company on the full year 2020” due to the volatile environment, however, they added that volume indications given in the previous trading update pointed towards wholesales of around 4,000 units in 2020, a decline of over 30% year-on-year.
In its trading update in late June, Aston Martin tapped investors for another £152mln in a discounted fundraising to help tide it over the coronavirus crisis while its new DBX sports utility ramps up production.
The group also reported that pandemic disruption will lead to lower retail and wholesale sales in the second quarter compared to the first, while both retail and wholesale average selling prices are being affected by de-stocking.
Aston Martin shares were down 6.9% at 46.3p in mid-morning trading.