(AOF) – Thales (-4.87% to 133.80 euros) occupies last place in the CAC 40 index after UBS’s downgrade of the defense group’s shares. The broker lowered its recommendation from Neutral to Sell and its price target from 140 to 115 euros. In its note, UBS explains that Thales’ DIS (Digital Identity and Security) division, which represents 25% of the group’s Ebit, experienced strong double-digit growth in 2022 and the first half of 2023. This growth was made possible by semiconductor shortages and resulting price increases.
But this shortage has now been resolved underlines UBS which continues its explanation estimating that “the approximately 40% of the turnover that the DIS activity derives from the manufacture of bank cards and SIM cards should decrease by 17% in 2024 and by 7 .5% additional in 2025.
The research office expects a decline of 3% on a comparable basis for the DIS activity in 2024 compared to a consensus of +5.3%.
The broker also judges that the long-term headwinds for its space activities are not fully appreciated by the consensus. “SpaceX launchers are significantly less expensive than those offered by Thales customers, including those under development,” he notes. UBS considers the challenges to be structural.
“Thales Alenia’s activities in the field of satellite manufacturing are also structurally challenged by the emergence of constellations in low Earth orbit, made financially possible by falling launch costs, which are generally manufactured and operated by the owner”, adds the Swiss bank.
Thales will reveal its 2023 annual results on March 5.
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