On Friday, Berenberg reduced its price target on VAT Group AG (VACN:SW) shares to CHF520 from CHF539, while keeping a Hold rating on the stock.
The adjustment follows a significant drop in VAT's stock value on Thursday, which saw a 9.7% decline. This decrease was attributed to two primary factors that influenced investor sentiment.
The first factor was related to the order intake for the second quarter. Although VAT surpassed the consensus estimate with an order intake of CHF271 million, there was an anticipation of around CHF280 million based on market buzz prior to the report. It is important to note that this higher expectation was not shared by the sellside analysts but was more prevalent among the buyside investors.
The second factor was an unexpected shift in product deliveries. VAT Group advanced some of its deliveries due to the planned implementation of a new ERP system in Switzerland, which accounted for CHF8 million in the second quarter. The upcoming ERP rollout is also expected to cause a two-week halt in production at the Haag facility, which will likely impact the sales figures for the third quarter.
VAT Group has provided a third-quarter sales guidance of CHF235 million to CHF255 million, which falls short of the CHF275 million projected by some analysts. The anticipated total impact on sales due to the advanced deliveries and production stoppage is estimated to be between CHF20 million and CHF25 million, with CHF8 million of this impact already realized in the second quarter. This revised guidance has been a contributing factor to the reassessment of VAT Group's stock value.
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