Jefferies has made a revision to the price target on shares of Capgemini SE (CAP: FP) (OTC: CAPMF), bringing it down to EUR 185.00 from the former EUR 195.00, while keeping a Hold rating on the stock.
The adjustment follows the release of Capgemini's second-quarter results for 2024, which did not meet the expectations that had been set earlier in the year.
The firm pointed out that the consensus forecasts for Capgemini had been overly optimistic throughout the year, and the weaker-than-anticipated performance in the second quarter served as a trigger for a downward adjustment in expectations.
According to the analyst, this recalibration of consensus estimates has reduced the risk associated with the company's future outlook.
Despite this adjustment, the analyst noted that the current valuation of Capgemini's shares still reflects the anticipated events and developments. The Hold rating suggests that the firm advises investors to maintain their current position in the stock without increasing or decreasing their holdings at this time.
Jefferies' statement emphasized the relationship between the company's growth prospects and its stock valuation, indicating that the reduced growth expectations have been factored into the current price target. The analyst's comments reflect a cautious stance on Capgemini's near-term growth potential.
In other recent news, Capgemini's first half of 2024 results were released, evidencing resilience in the face of challenges. Despite a slight dip in revenue and bookings, Capgemini exhibited improvement in the second quarter, particularly in North America. The company's operating margin remained steady at 12.4%, and organic free cash flow saw an increase. The company also adjusted its full-year growth outlook to a modest decline, yet remains confident due to strategic partnerships and a focus on generative AI. Furthermore, two significant deals were announced in Q2, hinting at potential future growth.
The revenue for H1 2024 was €11.138 billion, marking a decrease of 2.6% at constant exchange rates. However, the operating profit for H1 was €1,147 million, a slight increase from the previous year. Despite the challenges, the company is aiming for a 14% margin next year. The company remains optimistic about improvements in North America in the upcoming quarters.
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