Valeo: Bryan Garnier upgrades to 'buy'

(CercleFinance.com) - Bryan, Garnier & Co.
believes that investors should take advantage of the recent correction in the automotive supplier Valeo's share price. Analysts have therefore upgraded their previous "neutral" rating to “buy,” having raised their corresponding target is raised from 62 euros to 65 euros, meaning upside potential of over 15%.

Admittedly, Valeo disappointed investors when it published disappointing organic growth in 2017. And by being cautious in this respect for 2018, forecasting roughly 5% growth, while the consensus was expecting 7%. This explains the reduction in forecasts for the current year and the share's fall, even though its medium-term outlook, such as revenues of 27 billion euros by 2021, remains relevant.

Indeed, the coming onstream of Valeo's joint venture with Siemens (in electric propulsion) is reflected in a healthy order book and good visibility. However, the necessary investments - which had not been taken into account by the market - according to a report - will, in the short term, weigh on the group's margins.

However, after falling by over 11% since this "warning", Bryan Garnier believes that Valeo's current share price “seems to offer an attractive entry point into one of best-positioned stocks to play sector megatrends” in the automotive sector. In addition, publications should also improve in the second half of the year. In short, analysts say they are convinced that the majority of bad news is now over.



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