Carrefour: UBS says stop selling.
(CercleFinance.com) - UBS has upgraded its opinion on the share of French retailer Carrefour, which recently has been hit by a severe warning (-18% in a month).
Its analysts no longer advise investors to sell the stock, having adopted a neutral rating. Despite this, they have cut their target price for the share from 19.5 euros to 16.5 euros.
Indeed, Carrefour's market is characterised by fierce competition on prices, even as its assets are using an increasing amount of capital. While the group's small formats (supermarkets and convenience stores) are performing well, larger formats (hypermarkets), which represent about 50% of total revenues, are in bad shape and are losing market share to Leclerc stores.
This may be so, but, "the (Carrefour) brand is not out of steam - it is just too expensive," UBS believes. To date, the consensus expects half of the "price investment" required to improve the group's competitiveness against Leclerc. The broker's report says, "It's a start, and with Bompard likely to target costs to fund the remainder (strategy update later this year), the downgrade cycle could be ending."
Copyright (c) 2017 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.
Its analysts no longer advise investors to sell the stock, having adopted a neutral rating. Despite this, they have cut their target price for the share from 19.5 euros to 16.5 euros.
Indeed, Carrefour's market is characterised by fierce competition on prices, even as its assets are using an increasing amount of capital. While the group's small formats (supermarkets and convenience stores) are performing well, larger formats (hypermarkets), which represent about 50% of total revenues, are in bad shape and are losing market share to Leclerc stores.
This may be so, but, "the (Carrefour) brand is not out of steam - it is just too expensive," UBS believes. To date, the consensus expects half of the "price investment" required to improve the group's competitiveness against Leclerc. The broker's report says, "It's a start, and with Bompard likely to target costs to fund the remainder (strategy update later this year), the downgrade cycle could be ending."
Copyright (c) 2017 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.