(News Bulletin 247) – Oddo BHF on Friday downgraded its recommendation on the Aperam share from ‘neutral’ to ‘underperformance’, with a price target lowered from 41 to 31 euros.
In a research note, the intermediary believes that the strong outlook displayed by the steelmaker in Brazil will not be able to compensate for the current weakness in Europe
Oddo recognizes, of course, that the producer of stainless steels and special steels benefits from strong assets in Brazil, a country which generates some 40% of its gross operating surplus (Ebitda) and which should sustain its trajectory on the coming years.
But the analyst also believes that the current trend is dominated by the weakening of the economy in Europe (60% of Ebitda), a phenomenon exacerbated according to him by intense competition, which leads him to sharply reduce his expectations.
“The generation of solid cash and the financial policy favorable to shareholders remain important assets as well as a satisfactory ESG profile, but they are insufficient to compensate for the lack of visibility on an upcoming turnaround in Europe,” concludes Oddo.
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