Elis: Credit Suisse still a buyer, but cuts target

(CercleFinance.com) - Credit Suisse maintains its buy ("outperform") rating on the share of French industrial launderer Elis.
However, the broker has reduced its financial forecasts, which has led it to cut its target price for the share by 9% to 16.55 euros, against 18.2 euros previously.

Analysts has reduced their 2019-21 EPS estimates by 11% to 17%, to take into account "higher tax charges and weaker than expected near-term EBITDA margin performance".

Remember that Elis is cautious about 2019: management anticipates that the increase in costs will knock up to 90 basis points off its margin, although that it will be able to offset 20 to 60 basis points at the end of the year by price increases, service improvements and cross-selling.

In addition, high debt (Credit Suisse anticipates 3.2x EBITDA at the end of the year) and increased investments (20% of sales this year) should limit the group's ability to make significant acquisitions in the near term.

However, Elis' management has contributed to reset margin expectations, when Credit Suisse continues to distinguish Elis for "organic growth, an attractive valuation and continued bolt-on M&A potential".



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.