Stellantis ‘ strong growth outlook should successfully mitigate any headwinds from the ongoing United Auto Workers strike, according to Barclays. The firm initiated coverage of the Amsterdam-headquartered automobile manufacturer with an overweight rating. Barclays’ price target of €22.5, or $23.74, implies more than 20% upside from Stellantis’ $19.68 close Friday afternoon. Stellantis has recently come under pressure as a target of the UAW impasse, which started Sept. 14. Roughly 25,200 workers have walked out since then. Despite this, Stellantis’ stock is still trading near its all-time highs after rallying close to 40% so far this year. STLA YTD mountain STLA ytd chart Analyst Henning Cosman acknowledged that many investors may be reluctant to jump into the stock at its current elevated levels. However, he still believes this valuation is “relatively inexpensive” when considering the firm’s excellent performance, strong resilience and high total shareholder return propositions. As another risk factor, Cosman believes the company will not be able to report a clean set of earnings until July 2024 or August 2024 given the current strike. On the other hand, he believes this timeline gives the company a chance to show investors how it’s faring amid headwinds such as an overall declining macroeconomic environment, intensifying competition and “inevitable price/discount normalization.” “That is also an opportunity to prove its status as ‘most efficient operator’ with one of the highest total shareholder returns propositions in EU/US Autos (dividends, buybacks, earnings upgrades, rerating). And ultimately, this is exactly what many investors are waiting for, in our view, who don’t want to buy before understanding the magnitude of any upcoming earnings normalization,” Cosman wrote. The analyst also emphasized a “plausible path” for Stellantis to achieve its impressive margin and free cash flow targets, noting CEO Carlos Tavares’ strong adherence to cost discipline and the company’s reputation of underpromising and overdelivering. “While we think that some margin normalization is inevitable … we view STLA as very well positioned to sustain very strong operating performance — thanks to further near-term merger synergies, but also because it has earned the benefit of the doubt for excellent execution, in our view,” he wrote. Cosman added: “As such, STLA should be a ‘core holding’ candidate for most EU/US Auto investors, in our view, even if we don’t see an immediate catalyst for positive consensus earnings revisions or an upward re-rating.” — CNBC’s Michael Bloom contributed to this report.