Euronext shows one of the largest declines of the day on the Paris Stock Exchange following a deterioration of Credit Suisse, which is no longer a buyer of the title of the stock exchange platform.
Euronext weighed down by a downgrading of Credit Suisse | Photo credits: Pavel Ignatov / Shutterstock.com
Euronext fell up to 4% on Tuesday on the Paris Stock Exchange, following a deterioration of Credit Suisse, which went from “outperformance” to “neutral” on the title of the stock exchange platform. The target price is reduced from 89 to 77 euros.
For Haley Tam, the analyst author of the note, Euronext is exposed to headwinds in the short term due to the current level of the stock markets and the weakness of the volumes of transactions. He also cites the loss of market share, the risk of recession in the euro zone and the decrease in transactions on government bonds.
Euronext considered a “value trap”
According to him, Euronext is a “value trap”, namely an asset whose valuation level is so low that it is perceived, wrongly, as a buying opportunity. The strong generation of cash flow constitutes a favorable factor, but the return on investment that a significant merger-acquisition operation would represent seems unlikely in the short term, he qualifies. As a result, the analyst lowers his profit growth forecast for the period 2022-2024 to 16%.
Euronext has lost 27% since the start of the year. Over one year, the decline reached 35%. On the other hand, the action gains 3% over three years and 41% over five years.