Euronext: UBS downgrades to 'sell' - volumes to be watched
(CercleFinance.com) - UBS has downgraded its rating on the Euronext share from "neutral" to "sell," warning investors about the trend in volumes.
At the same time, the broker has cut its 12-month target price from 63 euros to 51 euros (-19%).
According to analysts, trading volumes on Euronext's spot markets are eminently cyclical, and "after almost 20 months of growth," they have just reached a turning point. Over past cycles, downward phases have lasted 12 to 16 months and have been accompanied by volumes falling by 30% to 40% from peak levels.
UBS therefore believes that the consensus is over-optimistic about the growth of volumes on Euronext stockmarkets, which it expects to see increase by 4%-6% p.a., and that the Euronext share is currently pricing in LT growth of 20%. Meanwhile, analysts expect volumes to increase by just 2% in 2018 (with sequential declines from Q2), followed by a decline of 9% next year, before a slight upturn of +1% in 2020.
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.
At the same time, the broker has cut its 12-month target price from 63 euros to 51 euros (-19%).
According to analysts, trading volumes on Euronext's spot markets are eminently cyclical, and "after almost 20 months of growth," they have just reached a turning point. Over past cycles, downward phases have lasted 12 to 16 months and have been accompanied by volumes falling by 30% to 40% from peak levels.
UBS therefore believes that the consensus is over-optimistic about the growth of volumes on Euronext stockmarkets, which it expects to see increase by 4%-6% p.a., and that the Euronext share is currently pricing in LT growth of 20%. Meanwhile, analysts expect volumes to increase by just 2% in 2018 (with sequential declines from Q2), followed by a decline of 9% next year, before a slight upturn of +1% in 2020.
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.