Aveva: Stifel downgrades stock
(CercleFinance.com) - Stifel has downgraded its rating on Aveva shares from 'buy' to 'hold', having reduced its corresponding target price from 3551p to 3000p, believing that in the short term the share's price will depend on the news flow regarding a potential bid from Schneider regarding remaining shares.
"We believe Aveva's strategy to push towards subscriptions and the cloud is the right one; however, we think there exists significant uncertainty in the pace of this business model transition," the broker said in its comments on the British group.
From this viewpoint, the target EBIT margin of over 35% in 2026 seems optimistic given the mix effect of the faster growing, lower margin cloud business and potential additional investment in the cloud.
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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.
"We believe Aveva's strategy to push towards subscriptions and the cloud is the right one; however, we think there exists significant uncertainty in the pace of this business model transition," the broker said in its comments on the British group.
From this viewpoint, the target EBIT margin of over 35% in 2026 seems optimistic given the mix effect of the faster growing, lower margin cloud business and potential additional investment in the cloud.
Copyright (c) 2022 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.