PSA Peugeot Citroen shares traded at the lowest level in almost three decades following Citigroup’s decision to cut its recommendation on the stock.
The reason behind Citigroup’s move was Peugeot’s struggles with cash. Europe’s second-largest carmaker dropped as much as 5.1 percent to 4.51 euros and was trading down 4.3 percent at 2:41 p.m. in Paris, with the company being valued at 1.61 billion euros ($2.05 billion). Its stock sold today at the lowest price since 1985, when it traded at 2.21 euros, according to NYSE Euronext.
Peugeot said in July it had been burning through about 200 million euros in cash every month at its automotive unit for the past year. According to Citigroup’s analysts, Peugeot’s liquidity may become stretched by the end of 2014.
The bank reduced its recommendation on Peugeot to sell from neutral, and also lowered the stock-price estimate to 3 euros from 8.50 euros. The French automaker said in October that net debt at the end of 2012 will get close to 3 billion euros, more than the target of 2.5 billion euros set in July. The reason for this is that industrywide auto sales in Europe head for the biggest drop in 19 years.