Reuters
FILE PHOTO: 2019 Jeep Wranglers move to the Final 1 assembly line at the Chrysler Jeep Assembly plant in Toledo, Ohio
- Fiat Chrysler sank as much as 5.1% Tuesday after Goldman Sachs gave it a "sell" rating, erasing a month of gains as markets hit record highs.
- The investment bank set its price target at $13.50 per share, implying a 8.5% downside from its current price of $13.67.
- Goldman analysts cited market volatility in Latin America, a lack of investment in high-tech automotive technologies, and Europe's strict CO2 regulations as main issues facing the automaker.
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Fiat Chrysler fell as much as 5.1% Tuesday after Goldman Sachs initiated coverage on the stock with a "sell" rating.
The investment bank set its price target at $13.50 per share. Fiat Chrysler traded at $13.68 per share as of 11.25 a.m. ET, reaching its lowest level since mid-June despite markets hitting record highs over the last several trading days.
"We see limited scope for further earnings growth from North America (NA), while other segments of the business face challenges," Goldman analysts George Galliers, Gungun Verma, Bjorn Stadel, and Philipp Konig said in their note.
Though the analysts noted Fiat Chrysler has outperformed its competitors over the last three years, they cite its earnings volatility in Latin America and regulatory difficulties in Europe as key issues for the company. Fiat Chrysler can't expect Latin American markets to bring the same profits as they did a decade ago due to "market inconsistencies," according to the report. The automaker also faces a larger climb than its peers to reach Europe's 2021 CO2 compliancy levels.
The world's eighth-largest automaker has also fallen behind its competitors in recent technological advancements, the analysts said. While competitors Ford, GM and Mercedes-Benz invest in electric vehicles and high-tech driver assistance systems, Fiat Chrysler "has been more restrained than peers" in entering the high-tech sectors.
Wall Street's consensus estimate for Fiat Chrysler's price target stands at $16.88 per share. The company has 12 "buy," 14 "hold," and 3 "sell" ratings, according to Bloomberg data.
The company's stock is now down roughly 5% year-to-date.
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