Another sharp drop in Elior on the stock market on Monday. At the end of the morning, the title of the collective catering group fell by more than 20%, to 2.08 euros, despite a decline of more than 15% cumulatively during the two sessions on Thursday and Friday.
For Stifel analysts, who maintain their recommendation to “sell” with a price target of 2.20 euros, against 2.80 previously, the risks are high that the company will not manage to meet analysts’ consensus expectations. . Risks related to the current inflationary environment, labor shortages and one-time charges following the arrival of the new CEO and the rise in interest rates, indicates the broker in its research note for this Monday.
Stifel sharply reduces its financial forecasts for the next three years. It now expects a gross operating surplus (Ebitda) of -48 million euros in 2021-2022, against -31 million previously, of 53 million in 2022-2023 (91 million previously) and 100 million in 2023-2024 ( 133 million initially). Free cash flow is not expected to be positive before this same financial year.
Increased return to acting
Same tone displayed by analysts at Oddo BHF, still “underperforming” but with a target price of 2.60 euros rather than 3 euros previously. ” Following a company contact, we note a cautious message linked to certain macroeconomic elements which could weigh on Elior’s activity in the short term. “, writes the research office, which explains that the group is currently undergoing” supply difficulties and very high inflation on certain raw materials linked to the summer drought, in particular butter and milk, products that are difficult to substitute “. At the same time, Elior is facing recruitment difficulties on the return of summer, Oddo BHF further indicates, with fewer available manpower, which leads to additional wage inflation.
Florent Thy-tine, Head of Equity Research at TP Icap Midcap, for his part, puts forward several explanations for the downward revisions to financial analysts’ forecasts: ” Certain negative elements during the quarter [juillet-août-septembre] (…) moreover, the salary increase at Elior Services is expected to exceed 5% according to our estimates, much higher than the group’s expectations. Added to this is an increased use of temporary workers, while some employees have not returned after the holidays. Finally, the loss on the cessation of Preferred Meals activities could be higher than the 35 million euros forecast “. In the light of this news, the achievement of the objective of a gross operating surplus at equilibrium seems compromised.