Credit Suisse downgrades Aston Martin to 'neutral', slashes price target

Credit Suisse downgraded its rating on shares of Aston Martin Lagonda to 'neutral' from 'outperform' on Tuesday, slashing the price target to 529p from 1,630p.

The bank said it was cutting its volume and pricing assumptions and its EBIT forecast for 2019 following the company's profit warning last month.

"We expect net debt/EBITDA leverage at 2.9x by end-2019. If the economic environment deteriorates further, a capital increase might be needed to deleverage the balance sheet, in our view (management clearly said that this is not planned)," it said.

CS noted that since its initiation of the stock, softer demand and volatility in working capital have driven a £360m increase in its 2022 net debt forecasts.

"This incremental balance sheet risk, slower growth profile and delay to initial profitability leads us to reconsider the appropriate valuation multiples," it said.

"The profit warning reflects weakness in demand. We believe that this does not reflect a weak brand but, rather, high UK exposure. If AML had Porsche's geographical mix, Q2 sales would be up 21% (not the reported 4%), all else equal."

At 1250 BST, the shares were down 5.2% at 484.60p.