Valeo: question of transition

(Boursier.com) — Valeo camped below 19 euros this Friday in Paris, while Jefferies remains to ‘underperform’ on the equipment manufacturer with a price target reduced from 15 to 14 euros only in a market which remains in a sequence of heavy transition… Goldman Sachs had already degraded the value to ‘neutral’, reducing the cursor from 20 to 19 euros. GS recommended a selective approach of the European automotive sector in an environment of uncertainty and favors companies whose earnings may surprise on the upside. Valuations look cheap across its coverage, reflecting investors’ “somewhat bearish” expectations…
Regarding the company led by Christophe Perillat specifically, the bank sees limited upside potential: It expects 2023 to be indeed “a more difficult year” for Valeo compared to its peers due to headwinds linked to the market (high exposure to the EU) and internal transition (consolidation of the JV). “We continue to believe that Valeo is well positioned to benefit from the transition to electric and autonomous vehicles, but believe that the road to an operating margin of 6.5% remains long.”