Aston Martin (LON: AML) shares declined almost 7% Tuesday after the company’s stock was downgraded by Jefferies analyst Philippe Houchois.
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In a research note to clients, the analyst cut Aston Martin to Hold from Buy, also slashing the firm’s price target to 120p from 530p.
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Aston Martin shares closed Tuesday’s session at 133.1p and are down more than 74% in 2022, although the shares have jumped in the last month.
Houchois explained that Aston Martin likely needs further recapitalisation in the future, despite having recently completed a rights issue. He added that the company is behind its peers on industrial scale and lacks a sustainable operating structure, while it may need help from another automaker to gain scale.
“Despite having just completed a major rights issue, AML still screens as candidate for future recapitalisation by the time the business achieves a viable operating structure, possibly 2024,” wrote the Jefferies analyst.
“Trading conditions have certainly been challenging but the last few years have also been supportive for luxury sports car demand,” he added.
The downgrade follows last week’s move by Barclays to initiate Aston Martin shares with an Overweight rating and 175p price target, with the firm seeing a “plausible path to a sustainable business model” for the company.
Aston Martin shares are down a further 1.5% at the time of writing on Wednesday.