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Citi reiterates 'buy' on Aston Martin ahead of Q2 results

By Michele Maatouk

Date: Wednesday 07 Jul 2021

LONDON (ShareCast) - (Sharecast News) - Citi reiterated its 'buy' rating on shares of luxury car maker Aston Martin on Wednesday ahead of its second-quarter results.
The bank said Aston Martin is on the path back towards profitability. "In Q2 we expect to see further signs of recovery from higher DBX deliveries, increased contribution from Specials, and sustained 9% EBITDA margins ahead of a meaningful step up to an 18% EBITDA margin in 2H," it said.

Citi is forecasting 24m EBITDA in the second quarter, including a recently flagged 5m bad debt provision following termination of a commercial agreement with a Swiss dealer.

"Our proprietary residual value data shows an appreciation in the value of used DBX vehicles in June, demonstrating the strong pricing environment and consumer demand that should support margins," the bank said.

It added that the recent bond issuance has eased liquidity concerns and said that on its estimates, the 575m cash position leaves sufficient headroom for cumulative 365m negative free cash flow over FY21/22 before turning positive from FY23.

Citi has a 2,800p price target on Aston Martin shares.

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