1315 Friday 16 November 2018

Aston Martin had their much publicized IPO at the start of October and although there was much fanfare in the build-up, its stock performance has been somewhat underwhelming.

Although many looked to make comparisons with the Ferrari IPO from a few years ago, AML.L opened at 1800.00, but was down nearly 25% within it’s opening three weeks hitting a low of 1365.00 by the 24th. The is however one piece of bad timing that coincided with Aston Martin’s IPO and that was the disastrous rout of global equities seen throughout the month of October. As the horror show of October came to an end, like with so many other stocks, Aston Martin began to rise again. Indeed, the first week of trading in November saw a 10% increase for the UK luxury car firm with prices fluctuating since.

This Thursday, drowned under the Brexit news flow, Aston Martin Lagonda gave their first earnings report as a publicly trading company, and frankly, the results were pretty impressive.

Here are some of the highlights vs. Q3 ‘17:

  •          Revenue increased 81%

  •          Wholesale volume up 98%

  •          EBITDA up 93%

  •          Operational cash flow up £33.9m

One of the key factors behind the results were improved sales within the UK and more importantly, within China which was highlighted as a target by CEO Dr Andy Palmer. In theme with their Asian ambition, it was also confirmed that progress with the new plant in Wales is on track. This site will be used for the manufacturing of the new range of SUVs targeted at the Far East. To go with the reported figures, Aston Martin also reaffirmed their outlook for the rest of the year, pointing to the high end of the guided range.

Following the release of the earnings, stock in AML.L shot up an initial 4.5% in early trading, but as news of the government resignations filtered in yesterday, the stock price dropped 10% before 0830. The stock performance yesterday was somewhat surprising as Aston Martin has already stated that business would be largely unaffected by Brexit as it would palm additional costs off to the end user. Coupled with this, a weaker Pound should be beneficial for the company as they seek to grow on international sales.

All of these factors combined have led to today’s buy recommendation from Deutsche Bank, who has set a target price of 2000.00 for the firm. Those with positions in the company will be buoyed by the results and following recommendation and if the 500.00p swing sounds realistic, AML.L may be deeply considered by other traders.


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