Valeo: not reassured, Oddo BHF still says 'Reduce'

(CercleFinance.com) - On Wednesday, an analyst at Oddo BHF confirms a "Reduce" rating on the Valeo share, underpinned by further cuts to earnings estimates after the group's CMD, which although providing welcome details, failed to reassure.


The broker's revisions underpin its Reduce rating in the run-up to 2020, which still seems uncertain. In addition, the share's valuation (2021e P/E of 11.4x) no longer offers any leeway for the company after its rerating over the past few months. Finally, faced with lower sales growth (~4% p.a.), an increase in depreciations, FCF that is insufficient to enable Valeo to reduce its debt by 2022, Oddo still considers that it too early for investors to return to the share (even beyond the JV) and that other sector players currently have more attractive profiles, it says.

The analyst therefore confirms a target price of 25 euros, which suggests downside potential of around 24%.


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