Magneti Marelli Attracts Interest from Carlyle and Cinven

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

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Equity Bottom-Up

No-moat, 4-star-rated Fiat Chrysler's stock has 55% upside to our EUR 20 fair value estimate from its current trading level.Since the markets began to sell off on China concerns in July, Fiat Chrysler's shares have been beaten down nearly 15%. We think the stock has been overly punished as the market myopically focuses on high debt leverage, cash needed for aggressive expansion, and press coverage of CEO Sergio Marchionne's pursuit of "cataclysmic" industry change.Slower China automobile demand growth will have insufficient impact on Fiat Chrysler to warrant a change in our EUR 20 fair value estimate. Out of a global total of 4.6 million vehicles shipped last year, Fiat Chrysler delivered 182,000 in China.Granted, some were high-profit units from Ferrari and even more so from Maserati. However, Fiat Chrysler has been late to the mainstream, high-volume China market. Jeep models should start penetrating the market in a more meaningful way later next year. Healthy demand in North America and a nascent but solid recovery in Europe enable at least partial offsets to a drop in Brazilian demand and weaker growth in China.In our opinion, the market does not have a full grasp of the potential profitability and returns that can be generated by the complete integration of Fiat Chrysler.Neither does the market fully appreciate the value of the underlying assets of Fiat Chrysler.We expect the Ferrari separation to be completed in the first quarter of 2016, unlocking an undervalued asset for shareholders.With a 4-star rating and the stock currently trading at a 35% discount to our EUR 20 fair value estimate, we think investors can own Ferrari through Fiat Chrysler at a compelling valuation.Analyst: Richard J. HilgertFull Report below the fold....

No-moat, 4-star-rated Fiat Chrysler's stock has 55% upside to our EUR 20 fair value estimate from its current trading level.Since the markets began to sell off on China concerns in July, Fiat Chrysler's shares have been beaten down nearly 15%. We think the stock has been overly punished as the market myopically focuses on high debt leverage, cash needed for aggressive expansion, and press coverage of CEO Sergio Marchionne's pursuit of "cataclysmic" industry change.Slower China automobile demand growth will have insufficient impact on Fiat Chrysler to warrant a change in our EUR 20 fair value estimate. Out of a global total of 4.6 million vehicles shipped last year, Fiat Chrysler delivered 182,000 in China.Granted, some were high-profit units from Ferrari and even more so from Maserati. However, Fiat Chrysler has been late to the mainstream, high-volume China market. Jeep models should start penetrating the market in a more meaningful way later next year. Healthy demand in North America and a nascent but solid recovery in Europe enable at least partial offsets to a drop in Brazilian demand and weaker growth in China.In our opinion, the market does not have a full grasp of the potential profitability and returns that can be generated by the complete integration of Fiat Chrysler.Neither does the market fully appreciate the value of the underlying assets of Fiat Chrysler.We expect the Ferrari separation to be completed in the first quarter of 2016, unlocking an undervalued asset for shareholders.With a 4-star rating and the stock currently trading at a 35% discount to our EUR 20 fair value estimate, we think investors can own Ferrari through Fiat Chrysler at a compelling valuation.Analyst: Richard J. HilgertFull Report below the fold....

Distracted by the Distractions: Focus on Fiat Chrysler's attractive stock valuation

Stellantis NV

Distracted by the Distractions: Focus on Fiat Chrysler's attractive stock valuation