Fiat Chrysler Automobiles
In 2017, Fiat Chrysler (FCAU) impressed investors by yielding an impressive positive return of 96.4%, the highest return among the auto stocks (FXD) in our coverage. After gaining 15.0% in the first quarter, its stock turned negative in the second quarter and saw 7.9% value erosion.
In comparison, it underperformed peers General Motors (GM), Ford (F), and Toyota (TM) in the second quarter. GM rose 8.4% in the second quarter while Ford and TM lost 0.1% and 1.2%, respectively. In the third quarter so far, FCUA has lost 6.7% through August 27.
Ratings on Fiat Chrysler
According to recent data compiled by Reuters, about 56.0% of the 23 analysts covering Fiat Chrysler (FCAU) stock recommended a “buy.” About 35.0% of these analysts gave “hold” ratings. The remaining 9.0% of these analysts recommended a “sell” for FCAU stock.
On August 27, analysts’ consensus 12-month target price for Fiat Chrysler stock was $26.00. This target price reflected an upside potential of ~47.5% from its market price of $17.63.
Although Wall Street analysts’ consensus target price for FCAU still reflects good upside potential, it has fallen to $26.00 from $31.90 in the last four months. In July, Jefferies analysts recently upgraded FCAU to a “buy,” which sparked optimism among investors and drove its stock higher.
In the second quarter, Fiat Chrysler (FCAU) reported an ~4.0% YoY rise in revenues. However, its adjusted EPS fell ~10.0% YoY (year-over-year) to 0.62 euros (~$0.72).
During its second-quarter earnings event on July 25, FCAU’s management also revised its 2018 guidance downward after reviewing its weaker-than-expected financial performance in the first half of the year. Now the company expects its 2018 adjusted EBIT to be 7.5 billion–8.0 billion euros, down from its original guidance of 8.7 billion euros.
In July, Fiat Chrysler’s US sales rose 6.0% YoY to 170,970 vehicle units. This was the fourth consecutive month in which FCAU’s US sales recovered YoY after 18 consecutive months of YoY declines.
The recent US-Mexico Trade Agreement, which we discussed in Part 1 of this series, is expected to act as a positive development for Fiat Chrysler.
In the next part, we’ll see what analysts are recommending for Tesla in August.