Deutsche Bank loses faith in Aston Martin

8th Apr 2019 11:20

(Sharecast News) - Having expected Aston Martin Lagonda to be less exposed to wider market frailties due to the prestige of the James Bond carmaker's brand, on Monday Deutsche Bank got the willies and performed a sharp handbrake turn.Despite a strong 2018 the German bank expects customer demand for the FTSE 250 group's cars will be hit by wider market volatility and Brexit-related uncertainty this year.Aston Martin has faced "much higher" volatility in demand compared to Ferrari, analyst Tim Rokossa said, making it more similar to premium marques like BMW than a true luxury brand, which led him to lower his applied stock price multiple by about 30%.He said he had "been of the view that Aston Martin would be less exposed to end-market volatility, but we revise our view, on the back of a slowdown in Aston's key markets, Germany and the UK, weighing on sales momentum".With forecasts cut and the multiple slashed, Deutsche's share price target was halved to 1000p and the recommendation cut to 'hold' from 'buy' on valuation grounds.As well as global automotive market volatility and Brexit-related uncertainty, Rokossa also foresaw squeezed margins from anticipated lower average selling prices in 2019 and the new electric vehicle plant in Wales."With muted demand momentum forecast in the short term, but increasing fixed costs already, due to St Athan ramping up, we see a risk to earnings in 2019," he said.The launch of Aston Martin's first SUV model, the DBX, late this year, remains "the key trigger" of the stock, but with deliveries of that model still several months out, the analysts sees "limited share price potential" until then.