On Thursday, Citi adjusted its financial outlook for Valeo SA (EPA:VLOF:FP) (OTC: VLEEY (OTC:VLEEY)), a French auto parts company, by reducing the price target to €12.50 from the previous €15.00. The firm has decided to maintain a Neutral rating on the stock.
The revision of the price target comes after a thorough review of Valeo's yearly financial results and a slight downward adjustment of the 2024 adjusted EBIT forecast by approximately 2%. Citi's analysts have identified several factors influencing this decision, including the growth in automotive production, recent foreign exchange rate fluctuations, and the cost-saving measures announced by Valeo.
For the fiscal year 2024, Citi predicts that Valeo will achieve group sales of around €22.5 billion and an adjusted EBIT of approximately €926 million. The decrease in the target price to €12.50 is partially attributed to a de-rating among Valeo's broader peer group.
The analysts have also introduced a High Risk rating to Valeo's stock, which aligns with the risk assessments for other French automotive suppliers. This new rating takes into account the current share price volatility and the uncertainties surrounding various factors that could affect the company's revenue and earnings growth. Despite these risks, Citi views the risk/reward balance as even and opts to continue with a Neutral stance on Valeo shares.
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