Bernstein updated its view on Aston Martin Lagonda (LON:AML) on Wednesday, moving the stock to a "market-perform" rating from "outperform" and trimming its price target to 50p from 110p. The action follows confirmation from Aston Martin's chief executive that the company will align to a materially lower core annual volume plan in the medium term.
At the full-year results, CEO Adrian Hallmark said the company will realign to a 5.5-6k core annual volume range - closely matching the retail sales the company has reported each year since its 2018 IPO - and stepping back from the 14,000-unit aspiration that accompanied the listing. Bernstein subsequently cut its 2026 core volume forecast by 18% to 5,006 units and reduced its 2029 forecast by 22%.
Market performance has reflected these revisions. The stock closed at 43.84p on March 10, representing a decline of 46.3% over the last 12 months and a 31% fall year-to-date, against a 2.4% year-to-date gain for the Bloomberg Europe Developed Markets index, according to Bernstein's note.
Financial results and forecast changes
For 2025, Aston Martin reported revenue of £1.26 billion with gross profit of £370 million, yielding a margin of 29.4%, down from a 36.9% margin in 2024. Adjusted EBIT was a loss of £189 million for the year.
Bernstein's modelling anticipates gradual improvement in profitability. The brokerage expects adjusted EBIT to narrow to a loss of £98 million in 2026 and to reach breakeven in 2027 - characterised in the note as roughly £15 million better than zero. Forecasts then project adjusted EBIT of £127 million in 2028 and £301 million in 2030, with the timeline for achieving those levels shifted one year later than Bernstein had previously assumed.
Bond markets are signalling higher risk: Aston Martin's bonds were quoted at a 19% yield-to-maturity when Bernstein prepared its note, higher than earlier levels. Bernstein used that elevated yield to derive a 20% weighted average cost of capital for its valuation work.
Valuation mechanics and financing assumptions
Bernstein applies an 11x multiple to its 2030 EBIT estimate of £301 million to derive a 2030 enterprise value of £3.31 billion. Discounting that figure at the 20% WACC produces a target enterprise value of £1.98 billion.
In its base case, the brokerage includes a £150 million equity raise, assuming issuance at near-current share price levels. That raise implies approximately 34% dilution, producing a post-raise share count of 1.36 billion. Bernstein also models a £50 million debt raise.
The note references Aston Martin's own disclosures: the company's 2025 annual report reportedly indicates it could tolerate only a 4% volume decline versus plan before breaching covenants at the next test in H1 2027. Bernstein contrasts that with the 2024 annual report, which the brokerage says showed 40% equivalent headroom.
Under Bernstein's assumptions, free cash flow does not turn positive on a full-year basis until 2028. Cash and equivalents are projected to fall to £23 million by mid-2027 absent the assumed capital raise.
Quarterly and operational details
In the fourth quarter, revenue of £518 million missed consensus by 12.9%, while gross profit of £160 million missed consensus by 29%. Adjusted EBIT was -£17 million versus a consensus expectation of +£6 million. Core average selling price (ASP) of £183,000 was 4.9% below Bernstein's model.
Operational indicators showed continued softness: the order book averaged five months through all of 2025, below management's 6-9 month target, and the contribution of options to core revenue remained flat year-on-year at 18%.
Comparable deal context
On the transactional side, Bernstein notes that CYVN Holdings' April 2025 acquisition of McLaren for £1.2 billion implies a 1.5x multiple to 2024 sales. Applying that multiple to Aston Martin generates an implied enterprise value of £2.3 billion versus a current implied EV of £1.63 billion cited in the note.
Bernstein's combination of lower volume assumptions, margin pressure, stretched covenant headroom and elevated financing costs underpins the broker's cut to both rating and price target.