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Metro: shares fall after Bernstein downgrade

( - The Metro share was down over 5% in early afternoon trading on Monday, after Sanford C.
Bernstein downgraded the stock on concerns of a "structurally weak business."

Bernstein analysts downgraded the shares of the German retailer from "market perform" to "underperform" and cut their corresponding target price from 13 euros to 11.50 euros.

"Metro's near decade long earnings decline continues. In theory it should be a thin margin, high asset turn business," the broker said.

"In reality it still pays the price for previous decades of overreach (30+ countries, too many customer types) and bad management (over centralised, lack of FCF focus, long leases, etc.)," it added.

"Management does many sensible things (e.g. disposals, refocus) but earnings continue to decline and quality of execution remains a big concern," Bernstein pointed out.

2020 is the year of the big reset, it noted, with the market now refocusing on earnings decline, downgrades, poor execution and valuation, it said.

Metro shares were down 5.3% at 13.1 euros on the Frankfurt Stock Exchange after these comments.

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