Aston Martin Lagonda Global Holdings PLC (LSE:AML) shares are a "high-risk, high-reward" investment, according to Barclays, which pointed to a "plausible path to a sustainable business model".
Initiating coverage on the James Bond carmaker with a note entitled "Never say never" in reference to the 1983 final appearance of Sean Connery in the title role, the bank slapped an ‘overweight’ rating and 175p price target on the stock, which compares to a close price of 143p on Wednesday and follows extreme share price volatility over the last week.
Analysts noted the shares are up 33% versus before the third-quarter warning and 57% above the low on 2 November, which was the day of the warning, in the context of a relatively flat sector index.
Following good progress in destocking, pricing and widening the portfolio of car models, the path to a "sustainable business model" is seen as relaunches of 2023/24 models "should" drive higher sales volume, higher revenue per unit and support management's target of gross margins above 40% for new models.
So even though "significant execution risks" remain, the price target implies a share price of around 15 times 2025 earnings.
"The concurrent shareholder value destruction has understandably disenchanted many investors and the small free float restricts the prospective investor base – but we believe AML now has the foundation to recover and create value from a low base," the analysts said.