Axel Springer: too expensive, UBS says
(CercleFinance.com) - UBS has begun monitoring the action of the German media and advertising group Axel Springer with a sell rating.
The broker has set its 12-month target price at 58 euros, which suggests downside potential of around 7.5%.
According to analysts, trends are becoming less favourable for Axel Springer, whose long-term growth estimates (appear) to be misjudged by the market.
While the group is the leading pan-European classified ad operator, although in this sector, organic growth is expected to fall from 13% in 2017 to 7% by 2020. The reason behind this is the historically low unemployment rate in Germany, which should limit revenues on job sites.
Likewise, there is competition from the (free) site Le Bon Coin against the French real estate site SeLoger.com. However, management expects to maintain double-digit growth.
In addition, UBS estimates that the EBITDA of this segment, Classifieds Media, should be under pressure from 2018 because of the investments that are required to "feed" growth. The corresponding consensus would therefore be threatened.
Finally, analysts conclude that the Axel Springer share is trading at a 30% premium relative to its sector, which is not justified by the quality of its assets, UBS states.
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.
The broker has set its 12-month target price at 58 euros, which suggests downside potential of around 7.5%.
According to analysts, trends are becoming less favourable for Axel Springer, whose long-term growth estimates (appear) to be misjudged by the market.
While the group is the leading pan-European classified ad operator, although in this sector, organic growth is expected to fall from 13% in 2017 to 7% by 2020. The reason behind this is the historically low unemployment rate in Germany, which should limit revenues on job sites.
Likewise, there is competition from the (free) site Le Bon Coin against the French real estate site SeLoger.com. However, management expects to maintain double-digit growth.
In addition, UBS estimates that the EBITDA of this segment, Classifieds Media, should be under pressure from 2018 because of the investments that are required to "feed" growth. The corresponding consensus would therefore be threatened.
Finally, analysts conclude that the Axel Springer share is trading at a 30% premium relative to its sector, which is not justified by the quality of its assets, UBS states.
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.