On Tuesday, Citi adjusted its stance on Eurofins Scientific SE (ERF:FP) (OTC: ERFSF) shares, reducing the price target to €47 from the former €60, while the Neutral rating remains unchanged. The revision follows a recent report by a short-seller that affected Eurofins' share price negatively, although it has since made a partial recovery.
The Citi analyst highlighted that Eurofins' bonds have not shown significant recovery when compared to the iBoxx Euro BBB index. This observation is pivotal as the company is anticipated to refinance its bonds and hybrid instruments by 2025. The new price target reflects a reassessment of Eurofins' financial instruments and future refinancing needs.
In addition to changing the price target, Citi has made a slight upward adjustment to its 2024 adjusted EBITDA forecast for Eurofins, now estimating it at €1,527 million. This adjustment accounts for the number of working days and the impact of foreign exchange rates.
The analyst also mentioned a debate around the valuation of Eurofins, whether it should be based on adjusted or reported forecasts. This discussion has influenced the bull/bear valuation spread for Eurofins, which Citi's revised price target now encapsulates.
Overall, the change in Eurofins' price target by Citi reflects a cautious outlook on the company's financial health, particularly concerning its bond performance and upcoming refinancing obligations.
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