Renault: stock reaction may prove overdone, Bernstein says
(CercleFinance.com) - Sanford C.
Bernstein maintains its "market perform" rating on the shares of Renault, saying that the stock's reaction following Carlos Ghosn's woes may prove "overdone."
According to the broker, Ghosn's arrest for suspected violation of financial laws could mean the "re-Japanization" of Nissan and the end of the alliance.
"It is hard not to conclude that there may be a gulf opening up between Renault and Nissan," Bernstein writes in a note.
On the other hand, the likely ousting of Ghosn at Renault could trigger a "new future" for the French car maker, the broker says.
While Renault has a market cap of 15.6 billion euros, its Nissan stake - prior to today's news - was worth 14.5 billion euros, leading many to argue that Renault is trading at a "discount" and is "undervalued," it adds.
"Renault has benefited from Nissan synergies - but it does not depend on them," Bernstein says.
"We do not believe an unravelling of the Alliance would be a total disaster for Renault shareholders - one could argue that selling the Nissan stake could actually realise more value than sitting with the current structure," it notes.
"The real synergies between the companies are surprisingly modest. Renault could be profitable even without Nissan," Bernstein concludes.
Renault shares are currently down over 9% on Euronext Paris.
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.
Bernstein maintains its "market perform" rating on the shares of Renault, saying that the stock's reaction following Carlos Ghosn's woes may prove "overdone."
According to the broker, Ghosn's arrest for suspected violation of financial laws could mean the "re-Japanization" of Nissan and the end of the alliance.
"It is hard not to conclude that there may be a gulf opening up between Renault and Nissan," Bernstein writes in a note.
On the other hand, the likely ousting of Ghosn at Renault could trigger a "new future" for the French car maker, the broker says.
While Renault has a market cap of 15.6 billion euros, its Nissan stake - prior to today's news - was worth 14.5 billion euros, leading many to argue that Renault is trading at a "discount" and is "undervalued," it adds.
"Renault has benefited from Nissan synergies - but it does not depend on them," Bernstein says.
"We do not believe an unravelling of the Alliance would be a total disaster for Renault shareholders - one could argue that selling the Nissan stake could actually realise more value than sitting with the current structure," it notes.
"The real synergies between the companies are surprisingly modest. Renault could be profitable even without Nissan," Bernstein concludes.
Renault shares are currently down over 9% on Euronext Paris.
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.