Stellantis’ share price surged by almost 10% after CEO Antonio Filosa reiterated business growth plans. European Commission President Ursula von der Leyen showed support for an affordable, European-made electric vehicle concept. Despite no significant new information shared, the company prioritizes new product launches to drive growth and fill profitable segments.

Maintaining a fair value estimate of EUR 14 per share, we anticipate gradual recovery in profitability for Stellantis. Execution of new model launches is crucial for profitability and free cash flow improvement. Europe’s push for a small, affordable electric vehicle built in Europe benefits Renault and Stellantis, aiming to reduce regulatory hurdles for compact cars.

European Automobile Manufacturers’ Association seeks super credits for vehicles with lower carbon footprints. Industry leaders are set to discuss urgent challenges with von der Leyen on Sept. 12. Recovery in profitability and free cash flow hinges on timely execution of new model launches. Stellantis aims for gradual recovery in profitability to reach a new normal level between 5% and 6% by 2028.

Read more at Morningstar: Stock Up Almost 10% on CEO’s Message of a Gradual Recovery