Metro: shares fall after Bernstein downgrade
(CercleFinance.com) - The Metro share was down over 5% in early afternoon trading on Monday, after Sanford C.
Bernstein downgraded the stock on concerns of a "structurally weak business."
Bernstein analysts downgraded the shares of the German retailer from "market perform" to "underperform" and cut their corresponding target price from 13 euros to 11.50 euros.
"Metro's near decade long earnings decline continues. In theory it should be a thin margin, high asset turn business," the broker said.
"In reality it still pays the price for previous decades of overreach (30+ countries, too many customer types) and bad management (over centralised, lack of FCF focus, long leases, etc.)," it added.
"Management does many sensible things (e.g. disposals, refocus) but earnings continue to decline and quality of execution remains a big concern," Bernstein pointed out.
2020 is the year of the big reset, it noted, with the market now refocusing on earnings decline, downgrades, poor execution and valuation, it said.
Metro shares were down 5.3% at 13.1 euros on the Frankfurt Stock Exchange after these comments.
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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.
Bernstein downgraded the stock on concerns of a "structurally weak business."
Bernstein analysts downgraded the shares of the German retailer from "market perform" to "underperform" and cut their corresponding target price from 13 euros to 11.50 euros.
"Metro's near decade long earnings decline continues. In theory it should be a thin margin, high asset turn business," the broker said.
"In reality it still pays the price for previous decades of overreach (30+ countries, too many customer types) and bad management (over centralised, lack of FCF focus, long leases, etc.)," it added.
"Management does many sensible things (e.g. disposals, refocus) but earnings continue to decline and quality of execution remains a big concern," Bernstein pointed out.
2020 is the year of the big reset, it noted, with the market now refocusing on earnings decline, downgrades, poor execution and valuation, it said.
Metro shares were down 5.3% at 13.1 euros on the Frankfurt Stock Exchange after these comments.
Copyright (c) 2020 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.