(News Bulletin 247) – The bank raised its advice to “keep” against “underperformance” this Wednesday. If Jefferies remains cautious about the evolution of the stock, the research office believes that the current price already includes a lot of risks.

In just a few months, Edenred went from being a market darling to being a bad performer. Investors were scalded by disappointing publications, particularly that of the third quarter.

They were also concerned about the regulatory risk in France (where a report from the Court of Auditors had highlighted the tax advantages on restaurant vouchers and gift vouchers) as well as in Italy. In the latter country, Edenred had warned that an amendment proposed to cap the commissions paid by merchants on meal vouchers. This measure, if approved, could deprive the group of 120 million euros in gross operating profit (Ebitda) over a full year.

Result: the stock has fallen 45.2% since the start of the year, the second biggest drop in the CAC 40 behind STMicroelectronics.

Among the consultancies most unfavorable to Edenred was Jefferies which had an advice of “underperformance”, the equivalent of “sell” in its nomenclature.

However, the bank revised its opinion this Wednesday, moving to “hold”, while adjusting its target to 25.30 euros against 31.8 euros previously.

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Risks already well integrated

This change in advice benefits Edenred shares, which rose 4.1% around 2:40 p.m. on the Paris Stock Exchange, which constitutes the largest increase in the CAC 40 this Wednesday.

Jefferies is cautious about the evolution of the action. The research office also expects the slowdown in growth to continue in the fourth quarter. The establishment expects operating income growth of 7% on a comparable basis after 10.8% in the third, much less than the consensus which anticipates an increase of 12%.

Edenred would also have little leverage to improve its margins with this deceleration in growth, notes Jefferies. The establishment, however, believes that the company should reach the lower end of its gross operating profit target, counting on a figure of 1.25 billion euros when the company anticipates between 1.245 billion and 1.285 billion euros.

In view of the recent fall in the share price, the bank recognizes that the market has now integrated the risks relating to the regulation of the company’s activity in Italy, but also in Brazil, one of the most important countries for Edenred. . According to Reuters, the country is working on a reform which should allow greater competition in the meal voucher market. But this measure is slow to be put in place.

At the same time, Edenred shares are currently trading at around 10 times their expected EBITDA over the next twelve months compared to 18 times at their peak in mid-2023. So now, Jefferies believes that the “return/risk” couple on the stock is now balanced and that it is appropriate to adopt a more neutral approach to the stock.