Suez: Credit Suisse downgrades rating on stock.

(CercleFinance.com) - Credit Suisse has downgraded its “outperform” rating on Suez to "neutral".


The main arguments: it will pay a lot for GE Water, and the utilities group's growth prospects are uncertain. It has hence cut its target price from 15.4 euros to 14.5 euros.

Indeed, together with GE Water, the group will greatly increase its exposure to industrial water, a more dynamic sector than residential water. However, the price paid - 3.4 billion dollars - is deemed to be high, at 10x the post-synergy 2016 EBITDA. In addition, the deal will require it to make a capital increase of 750 million euros. Finally, there is an execution risk in the generation of synergies.

In addition, the note refers to "uncertain mid-term growth". The cause of this is the tendency for "remunicipalisation" of water contracts in Spain, or falling prices. Not to mention, in the waste division in France, the acceleration of the decline of landfills and even regulatory changes in Chile.


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