Risk Reward Update

Research evidence excerpt

Risk Reward Update

UpdateM

RiskRisk RewardReward– Stellantis- Stellantis(STLAM.MI) (STLAM.MI)

Lagging behind partially priced in

PRICE TARGET €5.70 EQUAL-WEIGHT THESIS

Stellantis has traded within a P/E range of 2.5-6.0x since the merger, a discount to its ▪Stellantis lags behind on investments,

American peers, but relatively in line with European peers. With near-term earnings volatility product pipeline, market share, margins, FCF

with one-offs, we think FY28E EPS of €0.56 is now closer to sustainable. Against this, we and leverage, all of which leads to very

apply a multiple of ~ 10.2x, above typical averages, reflecting a degree of upside to earnings, depressed earnings, less healthy balance

offset by execution risk on the turnaround plan, leading to our €5.7 PT. sheet metrics and with valuation multiple

premium vs Volume peers €7.10 ▪That said, Stellantis has also led theConsensus Price Target Distribution €4.00 €12.50 underperformance amongst our European MS PT

Autos coverage, the bar has been set verySource: Refinitiv, Morgan Stanley Research Mean Morgan Stanley Estimates

low and their product is improving

sequentially, potentially bringing additional

market share gains in US and other markets.

RISK REWARD CHART AND OPTIONS IMPLIED PROBABILITIES (12M) ▪We see it as a structural advantage in the

long term, as the US should continue to be

more protected from China competition for

EUR a while, our main concern on the volume

space

€8.30(+64.29%)€8.30€8.30(+64.29%)(+64.29%) ProbProbProb (>8.30)~4.6%(>8.30)~4.6%(>8.30)~4.6%

Consensus Rating Distribution

7.5 21% Overweight

€5.70(+12.83%)€5.70€5.70(+12.83%)(+12.83%) 61% Equal-weight

ProbProbProb (>5.70)~31.5%(>5.70)~31.5%(>5.70)~31.5% 18% Underweight

5 €5.05€5.05€5.05

MS Rating

Source: Refinitiv, Morgan Stanley Research