On Wednesday, CFRA maintained a Sell rating on Atos SE (ATO:FP) (OTC: AEXAY), while lowering the 12-month price target to EUR1.70 from EUR1.80. This adjustment reflects a price-to-earnings (P/E) ratio of 0.85x for the year 2024, which is well below the company's five-year average forward P/E of 7.2x. The decision comes in light of Atos's weakening fundamentals and a challenging future outlook.
Atos recently provided a market update in April 2024, where it presented a refinancing plan. The company emphasized its need for EUR600 million in liquidity to maintain operations through 2024 to 2025. Atos is considering options for debt or equity financing to meet this requirement. To support its operations until the completion of its financial restructuring, Atos has secured EUR450 million in funding from creditors and the French government.
The revised price target follows the company's 2023 results, which reported a net loss of EUR3.4 billion. This loss was attributed to impairments of goodwill and other non-current assets. Additionally, Atos reported a negative free cash flow of EUR1.1 billion. The analyst's outlook remains cautious, citing Atos's deteriorating outlook and the uncertainties it faces due to near-term challenges.
The firm also revised its earnings per share (EPS) estimate for Atos in 2024 to EUR2.00 from EUR2.20, while maintaining its 2025 EPS forecast at EUR2.50. The adjustments in financial estimates and the price target reflect the analyst's view of the hurdles Atos is expected to face in the near future.
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