Stellantis' Turnaround Tale: Can Filosa's Restructuring Spark a $13.20 Rally?

Stellantis (NYSE: STLA), the global automotive giant born from the FCA-PSA merger, has faced a rocky journey since its 2021 formation. Plagued by delayed product launches, misaligned pricing strategies, and internal inefficiencies, its stock has plummeted 70% from its peak. But now, under the leadership of newly appointed CEO Antonio Filosa, the company is undergoing a dramatic operational overhaul. Jefferies' recent upgrade to a “Buy” rating with a $13.20 price target—implying a 38% upside—suggests investors may finally see light at the end of the tunnel. Let's dissect how Filosa's restructuring could turn Stellantis' narrative from cautionary tale to comeback story.

The Turnaround Playbook: Operational Overhaul and Leadership Clarity

Filosa's first 100 days have been marked by ruthless prioritization. The executive team has been slashed from over 30 direct reports to just 16, enabling faster decision-making on critical issues like brand rationalization, manufacturing footprint, and technology investments. This streamlining addresses a core problem: Stellantis' prior inertia in executing strategic shifts.

Jefferies highlights progress in key markets:
- Europe: Product launch delays are easing, with volumes stabilizing and fixed-cost absorption improving. The 2025 European EBIT margin is projected at 3.8%, up from depressed levels in 2024.
- North America: Pricing misalignments are being corrected, and the repositioned Ram Express and new Jeep Cherokee are driving margin recovery. The North American EBIT margin is expected to hit 5% by mid-2025, up from 2.6% at the start of the year.

The stock's 25% year-to-date decline reflects investor skepticism about its ability to overcome these issues. Yet Jefferies argues that many challenges are “self-inflicted and fixable”—a view now gaining traction as execution accelerates.

The Cost of Restructuring: Manageable Pain for Long-Term Gain

Annual restructuring costs of €500 million through 2027 are a drag on near-term profits, but they're offset by €15.1 billion in net cash and a projected rebound in free cash flow to €1.5 billion in 2025, rising to €5–6 billion annually by 2026. Margins are expected to stabilize at 6–8% by 2027, driven by:
1. Product Mix Shifts: EVs like the Jeep Cherokee and Fiat Grande Panda (accounting for 25%+ of volume by 2027) command higher margins.
2. Brand Simplification: Rationalizing its portfolio (e.g., exiting non-core markets or selling Maserati) will reduce overhead.

The alliance with Leapmotor and CATL is equally critical. These partnerships accelerate EV platform development, reducing costs and enabling Stellantis to compete with Chinese automakers in Europe and the U.S. The Dodge Charger's upcoming EV iteration—built on this platform—is a key growth lever.

Valuation: A Bottom-Fishing Opportunity?

At 4.4x 2026 estimated earnings and 0.08x EV/sales, Stellantis trades at a discount even to its peers. Its 70% decline from its 2021 peak and 38% drop from merger-era highs suggest investor pessimism is priced in. Jefferies argues the stock is primed for a “re-rating” as operational stability and margin improvements become evident.

Risks and Timing: Navigating the Near-Term Storm

• Execution Risk: Delays in product launches or brand sales could derail momentum.
• External Pressures: U.S. tariffs on Chinese-made batteries and component shortages remain threats.
• Sector Challenges: The broader automotive sector faces demand volatility as EV subsidies wane and inflation lingers.

Investors should time their entries carefully. The $13.20 target assumes Stellantis hits its 2026 EBIT of €8 billion, which hinges on stabilizing margins and executing its EV roadmap. A 6–12 month horizon may be ideal, with a focus on catalysts like:
- Q3 2025 earnings showing margin improvements.
- Positive dealer and consumer feedback on new models.
- Progress in resolving labor disputes and dealer conflicts.

Final Take: Buy the Dip, but Mind the Gaps

Stellantis' stock is a high-risk, high-reward bet on operational execution and leadership decisiveness. Jefferies' upgrade isn't just about optimism—it's a vote of confidence in Filosa's ability to “unstick” a once-stagnant giant. While the path to $13.20 is littered with execution hurdles, the valuation is compelling, and the stakes—25%+ upside—are too large to ignore.

For investors willing to bet on a turnaround, Stellantis offers a contrarian opportunity in a struggling sector. Just keep an eye on those restructuring milestones—and hope Filosa's playbook works this time.