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Vivek Kumar

Fiat Chrysler Automobiles, an Italian-American multinational corporation, said the terms of its alliance with Europe’s second-largest car manufacturer Peugeot SA had not changed after Il Sole 24 Ore newspaper reported that it is considering ways to cut a planned 5.5 billion euro ($6.2 billion) of special dividend distribution to its shareholders.

Fiat Chrysler Automobiles confirmed that it would remain committed to the deal agreed with Peugeot SA in December last year. “The structure and terms of the merger are agreed and remain unchanged,” a spokesman for the Italian-American automaker told Reuters in an interview.

The world’s eighth-largest automaker has agreed to the conditions laid down for a state-backed 6.3 billion euro loan, including a promise not to relocate or cut jobs to weather the ongoing health crisis.

According to Reuters, Italian business newspaper Il Sole 24 Ore reported that Fiat Chrysler Automobiles could conserve cash by reducing the special dividend, possibly by handing shareholders assets as compensation.

Fiat Chrysler outlook and price target

Six analysts forecast the average price in 12 months at $9.94 with a high of $12.37 and a low of $6.75. The average price target represents a -0.10% decrease from the last price of $9.95, according to Tipranks.

From those six, three analysts rated ‘Buy’, two analysts rated ‘Hold’ and one rated ‘Sell’. HSBC raises target price to EUR 11.4 from EUR 11. Jefferies raises target price to EUR 9.50 from EUR 8.

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Analyst comment

“We are reducing our 2020 US SAAR estimate to 15.5 million from 16.5 million due to the coronavirus demand shock. Our new Bull Case is 16.5mm with our Bear Case at 14.5mm. We make reductions to 2020 EPS for GM, F and FCA and the dealers accordingly,” Morgan Stanley noted in March.

“Our 2020 EPS falls to EUR 1.93 from EUR 2.85 previously. Of the EUR 0.92 decrease, about EUR 0.60 is a result of our 1mm unit SAAR forecast cut, where we have NAFTA shipments declining 8% Y/Y vs. our previous expectation of -2.5% Y/Y. Consistent with our forecasts for GM and Ford, the majority of the decrease vs. our previous expectation comes in Q2/Q3 where we now forecast NAFTA shipments down 12% and 8% Y/Y respectively vs. our previous expectations of -2% and 2%,” analyst added.

“Looking internationally, we forecast APAC shipments down 11.4% Y/Y with Q1 -30% / Q2 -14% / Q3 -8% with an uptick in Q4 of ~7%. Looking to EMEA, we forecast shipments down ~13% Y/Y vs. -2% previously, with the largest downward revision coming in Q2/Q3, where we are modelling shipments -20% and -12%, respectively. We have made no changes to mix or price in any region,” MS noted.

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