(Boursier.com) — Up 1.7% this Friday, difficult to speak of a rebound for the file Atos which shows a fall of 40% over the past week. Since January 1, the capitalization of the digital services specialist has now shrunk by 66%! The revisions of analysts have been chained on the file these last hours since the last announcements of reorganization of the company and its plans of split.
Note, among the latest adjustments, Morgan Stanley which reduced its target from 25 to 16 euros with an opinion to ‘underweight’. Bryan Garnier also cut his target from 24 to 13 euros, while remaining to ‘sell’. The broker lowered its operating margin assumptions and raised its net debt forecast. He considers that Evidian’s proposed split eliminates speculation on Big Data & Security business. In addition, if this split can constitute an attractive “exit door” for Atos shareholders, the time required to complete the operation makes the title unattractive for the next 12 months… The file will have to face many hurdles before the deal closes, and the absence of a CEO at group level until the split becomes effective can be a burden.
The presentation of the new strategy of the French specialist in digital services, whose future lies in two separate companies, and the announcement of the imminent departure of the managing director, Rodolphe Belmer, who only arrived at the start of the year at the head of the group, rekindled analysts’ concerns a little more: SG cut its target price from 32 to 15 euros, considering that the company’s risk profile had “significantly increased”, while the restructuring plan is “considerably more severe than expected”… The latter presents significant execution risks “because none of those who occupy key management positions have proven themselves as CEOs or operational directors of listed companies”. Moreover, the coming economic slowdown could make its restructuring efforts insufficient and the estimates for 2026 too optimistic…
The road will be (very) long
For Oddo BHF, the road will be long “despite strong strategic choices”… Following these announcements, the broker took into account the additional restructuring expected over the period 2022-24 (600 ME) and the increase in WCR (300 ME). This, coupled with a slight downward revision of its organic growth and MOA forecasts over the 2022-2025 period and an expected increase in financing rates, leads it to revise its EPS estimates downwards by an average of 70%. over 2022-2024 and cut its target from 23 to 13.5 euros. Despite the fall of the title, the analyst still sees “downside and a difficult momentum”.
Analysts at Deutsche Bank (‘hold’) meanwhile explained that the restructuring plan “involves a high degree of execution risk”… Although the decision is rational, it involves separating shareholders, strategies, governance and synergies.
Finally, Stifel (‘hold’) halved its target at 15 euros, considering that the consumption of cash is a major concern. The broker expects Atos to “burn” 1.4 billion euros of cash in 2022 and 2023 due to lower turnover, lower profitability and higher restructuring costs students. In addition, Evidian, which will inherit the Big Data and Cybersecurity activities, will remain heavily indebted. Finally, the departure of the CEO before a long and arduous recovery plan does not really inspire confidence…