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BofA cuts Carrefour rating to Neutral on margin pressure concerns

EditorEmilio Ghigini
Published 09/02/2024, 12:24
Updated 09/02/2024, 12:24
© Reuters.

On Friday, BofA Securities adjusted its stance on Carrefour SA (CA:FP) (OTC: OTC:CRRFY), downgrading the stock from Buy to Neutral and setting a price target of €17.00. The revision reflects the firm's perspective on the retail giant's current business challenges.

Carrefour (EPA:CARR) has been actively revising its business approach since 2022, building on the foundation of a recovery plan aimed at reinforcing its market position. The company has been focusing on strengthening its base in both Europe and Latin America while pushing forward with digital transformation and cash flow generation efforts. Carrefour's strategy also includes strict capital discipline alongside persistent cost-saving measures, which are anticipated to enhance total shareholder returns through increased dividends and share repurchase programs.

Despite these positive developments, Carrefour is encountering operational headwinds. The retailer is experiencing pressures in the French and Latin American markets, where challenges with integration and rising inflation are expected to impact profit margins. These factors have contributed to the analyst's decision to adjust the stock's rating.

The company's commitment to digitalization and capital management is part of its broader initiative to stay competitive in a rapidly evolving retail landscape. Carrefour's emphasis on cash flow generation is particularly crucial, as it underpins the ability to fund shareholder returns and invest in growth areas.

As Carrefour navigates through these market pressures, the new price target of €17.00 reflects a recalibration of expectations in light of the potential margin contractions. The downgrade to Neutral indicates a more cautious outlook on the stock's near-term performance amidst the stated challenges.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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