Shaken and Stirred Aston Martin Backers Get 1st Advice: Sell

(Bloomberg) -- The start to public life made by James Bond’s carmaker may have left investors a little shaken, as well as stirred. And now the first bank to give it a rating has some advice: sell.

Long-only investors are likely to “stay on the sidelines,” partly due to the fact the lock-up period preventing insiders from offloading shares is a relatively short six months, Jefferies analysts including Philippe Houchois wrote in a client note, initiating the 105-year-old firm at underperform, the equivalent of a “sell” rating.

The stock fell as much as 3.1 percent amid Thursday’s broader stock market rout, and was down 0.8% at 1,597.4 pence as of 8:40 a.m. in London, marking a decline of 16 percent since it began trading on Oct. 3.

The structure of the initial public offering as a “secondary only” deal -- meaning existing shareholders sold stock with funds going to them, instead of issuing new equity to raise capital to generate growth for the manufacturer -- is also likely to weigh on the shares, they added.

While “few stocks if any in our coverage will deliver stronger earnings progression” than Aston Martin, the Jefferies analysts said valuations on the Gaydon, England-based luxury sports-car maker price in “Porsche-like” margins. It will need to beat estimates for there to be any upside, they said. Jefferies is the first bank of those tracked by Bloomberg to start coverage.

The analysts gave the stock a price target of 1,400 pence, still about 10 percent below Thursday’s low. Even so, it’s still valued at a premium to some luxury peers, like Italian automaker Ferrari NV and French apparel firm Hermes International, the Jefferies analysts said.

--With assistance from Hanna Hoikkala and William Canny.

To contact the reporter on this story: Joe Easton in London at jeaston7@bloomberg.net

To contact the editors responsible for this story: Beth Mellor at bmellor@bloomberg.net, John Viljoen, Tom Lavell

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