Faurecia: with 'megatrend risks', UBS downgrades to 'Sell'
(CercleFinance.com) - Citing "too much uncertainty", UBS has downgraded its rating on the share of the French automotive supplier Faurecia from neutral to sell.
Having slashed its target price by 50% from 56 euros to 28 euros, this represents downside potential of about 20% relative to the share's current price.
Analysts expect the group's organic growth will fall from 7.6% in 2018 to 3.7% in 2019. Indeed, UBS now only expects global automotive production to increase by a token 0.3% this year, against 1.7% previously. It also fears "increasing pressure on prices." As a result, Faurecia's operating margin is expected to remain unchanged this year and its target for 2020 is now out of reach. UBS has therefore cut its EPS estimates by 5% to 15%.
“While the share price already discounts some risk of a profit warning, we think consensus earnings revisions will come down further,” UBS forecasts.
Copyright (c) 2019 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.
Having slashed its target price by 50% from 56 euros to 28 euros, this represents downside potential of about 20% relative to the share's current price.
Analysts expect the group's organic growth will fall from 7.6% in 2018 to 3.7% in 2019. Indeed, UBS now only expects global automotive production to increase by a token 0.3% this year, against 1.7% previously. It also fears "increasing pressure on prices." As a result, Faurecia's operating margin is expected to remain unchanged this year and its target for 2020 is now out of reach. UBS has therefore cut its EPS estimates by 5% to 15%.
“While the share price already discounts some risk of a profit warning, we think consensus earnings revisions will come down further,” UBS forecasts.
Copyright (c) 2019 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.