Continental: Oddo downgrades buy rating; cuts target price
(CercleFinance.com) - Following the profit warning made by Continental last week and the reduction in its earnings estimates, an analyst at Oddo BHF today says that he is downgrading his rating on the automotive parts supplier Continental, from buy to neutral, cutting his target price for the share from 240 euros to 180 euros.
In spite of the share falling sharply over recent weeks (-19% over the past month), which seems to suggest that the group's difficulties are now already largely priced in, the analysts says that it seems to be too early for investors to return to the share, due to limited earnings upside in the near term, the absence of catalysts, and the negative sentiment surrounding the automotive sector (mainly concerns about Europe and China). In the sector, the broker continues to prefer Michelin amongst tyre manufacturers and Plastic Omnium and Schaeffler among auto parts suppliers, it summarises.
Pointing out that this is the second profit warning this year after that made at the end of April, the analyst notes from a conference call held last Wednesday that the new 2018 targets reflect a second half, including a Q3, that will be very difficult - both in terms of growth, profitability and FCF generation.
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The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.
In spite of the share falling sharply over recent weeks (-19% over the past month), which seems to suggest that the group's difficulties are now already largely priced in, the analysts says that it seems to be too early for investors to return to the share, due to limited earnings upside in the near term, the absence of catalysts, and the negative sentiment surrounding the automotive sector (mainly concerns about Europe and China). In the sector, the broker continues to prefer Michelin amongst tyre manufacturers and Plastic Omnium and Schaeffler among auto parts suppliers, it summarises.
Pointing out that this is the second profit warning this year after that made at the end of April, the analyst notes from a conference call held last Wednesday that the new 2018 targets reflect a second half, including a Q3, that will be very difficult - both in terms of growth, profitability and FCF generation.
Copyright (c) 2018 CercleFinance.com. All rights reserved.
The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.