Wolfe Research upgraded Stellantis NV (NYSE:STLA) from Underperform to Peerperform on Monday, a move that followed a dramatic sell-off in the automaker's shares. The stock fell roughly 25% on the preceding Friday, and InvestingPro data show a one-week decline of 27.3%, leaving the share price at $7.32 - nearly 55% below the 52-week high of $16.28.
The steep drop came after Stellantis pre-announced a set of negative items that materially altered near-term financial expectations. Management signaled disappointing results for the second half of 2025 and presented a subdued outlook for 2026. At the same time, the company disclosed approximately c22.2 billion of charges related to realignment and EV programs, of which c6.5 billion are expected to be cash payments.
Those charges are consistent with InvestingPro figures showing the company has experienced significant cash strain: levered free cash flow was negative by over $14 billion in the trailing twelve months. In addition to the charges, Stellantis said it would suspend its 2026 dividend and intends to raise c5 billion through new debt issuance.
Wolfe Research characterized the magnitude of the announcements as larger than the market had anticipated. The firm noted in particular that the dividend suspension is a notable development given the company's previously reported 11.13% dividend yield, as cited in InvestingPro. That suspension, alongside the sizeable charges and the planned debt raise, has prompted analysts to lower expectations across earnings and cash flow metrics.
Despite the negative near-term picture, Wolfe Research expects some sequential improvement in both earnings and free cash flow in 2026 and 2027. The research note points to new products that could help recover U.S. market share and provide operating leverage as potential tailwinds during that period. However, the firm tempered its optimism by indicating it does not anticipate "truly transformative actions" at the company's upcoming Capital Markets Day in May that would materially strengthen the turnaround case. Wolfe Research concluded it remains skeptical of the broader turnaround story and advised investors to "stay on the sidelines."
The company also provided additional detail on the composition of the announced charges. Stellantis said the roughly c22 billion of second-half-2025 charges reflect a strategic reduction in emphasis on electric vehicles after concluding the pace of the energy transition had been overestimated and following prior operational shortcomings. The c22 billion figure includes c14.7 billion tied to realigning product plans, c2.9 billion in write-offs for cancelled products and c6 billion for platform impairments.
As part of that repositioning, LG Energy Solution will acquire full ownership of NextStar Energy by buying Stellantis' 49% equity stake in the joint venture, a transaction referenced by the company in its announcements.
The market reaction and company disclosures have prompted other brokerages to update their views. Morgan Stanley downgraded Stellantis from Overweight to Equalweight while raising its price target to c9.20, noting the company lags peers on investment and other financial metrics. Deutsche Bank adjusted its price target to c7.00 and maintained a Hold rating. Jefferies' analysts flagged the possibility of additional one-off charges in the range of c5 billion to c9 billion as part of the company's broader strategy overhaul.
The constellation of large charges, halted dividends and plans to raise debt have combined to reset investor expectations. While some operational recovery is anticipated across 2026 and 2027, the sizable near-term hits and continuing uncertainty about the scope of strategic actions leave the outlook contested among sell-side analysts and investors.