Metro AG: Commerzbank downgrades stock; cuts target price

(CercleFinance.com) - Commerzbank has downgraded its rating on German retailer Metro AG from "buy" to "hold" and has reduced its target price from 18.
5 euros to 14.5 euros for the share after the profit warning made over the weekend.

By way of explanation, the group's management has said that efforts to reposition the Metro Cash & Carry (MCC) unit in Russia require costs that are higher than originally expected, Commerzbank said.

On top of that, plan B that management of the Real chain is currently executing, in a drive to bring down personnel costs, actually results in higher costs in the short-to-medium term, it added.

Commerzbank said the profit warning comes as the second mishap, after the unpleasant surprise in December 2017 and the uninspiring FY 2017/18 earnings guidance that was provided.

"Credibility issues have driven the stock sharply down and the enterprise value is no longer far off the book values of its real estate portfolio, implying that investors would get the operational businesses almost for free," it said.



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