The PSA group has been a sensation recently, announcing a merger project "between equals" with competitor Fiat Chrysler (FCA). An agreement could be reached within a month, according to information from La Stampa. HSBC remains to buy on the stock, while raising its price target from 27 to 28 euros. So is ODDO BHF, which targets 29 euros. For its part, Citi has confirmed its purchase recommendation and its price target of 27.20 euros. FCA-PSA would be the world No. 4 with nearly 9 million vehicles, against a little over 10 million units for Volkswagen, Toyota and the Renault-Nissan-Mitsubishi.
Citi acknowledges, however, that the terms of the merger with FCA are largely more favorable to the Italian shareholders, although it is convinced that the shareholders of the French manufacturer should be rewarded for their patience. According to Citi's analyst, PSA's boss needs to see something we do not see yet, because it's curious at first sight that astute traders overpay an asset after waiting so long. Although synergies appear to be more limited than they were between FCA and Renault, PSA has nevertheless proved its ability to outperform. He should do the same with FCA.
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From a geographical point of view, PSA and FCA are complementary: the first is very present in Europe and the second in North America. Oddo BHF estimates the synergies at around 3 billion euros. "This deal gives visibility to the new group," says the broker, despite the "inevitable restructuring in Europe, and the risks of execution as competition".
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For Invest Securities, the merger project between PSA and FCA is a bet riskier than the – successful – Opel for the tricolor giant. "On the merits, this rapprochement between the two manufacturers, is not a new story. In December 2008, there was talk of a possible giant $ 50 billion at the time including PSA (without Opel) and Fiat (without Chrysler). Today, the question remains to know what motivates this merger project. If the two manufacturers have each reason to wish this rapprochement, the need however appears more pressing for FCA than for PSA, "say the analysts of the brokerage firm.
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FCA's chronic underinvestment in recent years (6% of its turnover in R & D and investments (compared to an industry average of 11% and 8% for PSA in 2018) has made it the manufacturer furthest from its CO2 objective (about 30 g / km above).
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Still many questions
Many questions remain unresolved, according to Invest Securities. "Have not synergies been reduced? Are there no commercial synergies that are not quantified at this stage for the PSA Group, particularly in the United States? In the opposite direction, is this merger unlikely to enter the end of the automobile cycle in Europe and the United States, making the synergies more difficult and longer to reach (their full effect is moreover envisaged for 2025)? Do the ranges have a real complementarity, will not it be necessary to abandon some of them in Europe? "Asks the stockbroker.
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What does the technical analysis say?
The title Peugeot may be anchored in a long-term uptrend since 2013, "it remains nonetheless particularly neutral since its records for the year 2018 around 25.5 euros," notes Nicolas Chéron, head of the market research at Binck.fr. "In fact, every return of the action near this barrier was an opportunity for the buyers to take profits." Moreover, once again, we can see that the price surge above 25.5 euros last week has been used by operators to get out of the folder.Any return to or above this price area calls for caution.The action holds, but its upside potential reduced ", judges the expert.
Evolution of the Renault share and technical analysis (click on image to enlarge)
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