(Boursier.com) — The CAC40 fell again this week, down 1.25% over five sessions, to 7,372 points this Friday evening. Operators’ expectations of a rate cut have declined somewhat after a series of better than expected indicators in the United States and several rather hawkish statements from members of the Fed and the ECB. Klass Knot, for the ECB, and Christopher Waller for the Federal Reserve, for example, considered it premature to talk about a reduction in interest rates, causing a rise in bond yields…
If speculation is therefore in full swing concerning the next decisions of the two major Central Banks, it is on the other hand almost certain to see the two Institutions opt for the status quo during their next meeting, in this case Thursday January 26 for the ECB and at the end of the month for the Fed. For the future, the ‘battle’ between operators and governors should continue. Markets are overestimating the pace and magnitude of the Federal Reserve’s interest rate cuts because they are overlooking stubbornly high inflation, according to economist Mohamed El-Erian. “I think we’re getting to the pivot, but relative to what the market expects, it won’t be as fast or as deep,” said Mr. El-Erian, president of Queens’ College, Cambridge and a Bloomberg columnist. Opinion’.
Period of ‘blackout’ requires (central bank officials are not allowed to speak in the days preceding a meeting), the microphone should regain the upper hand during the sessions to come. Especially since the quarterly season will increase in intensity next week with LVMH, STMicro and even Nokia and Remy Cointreau on the front.
On the oil market, black gold prices rose quite significantly (+2.8% for WTI), further supported by the strong tensions in the Middle East. Bitcoin is trading at $40,900 on Coindesk. Finally, on the currency front, the euro lost ground against the greenback, at $1.088 this evening.
VALUES
* Believe surge of 13.5%. Reuters’ stated at the end of last week that the group’s main shareholders had surveyed the market’s interest in a possible takeover of the company. The group has reportedly held discussions with the Swedish giant EQT and the Permira fund. While there is no indication that the operation will be successful, talks are still underway, a source close to the matter told the agency. Founded in 2005 and based in Paris, Believe advises independent artists and music labels, particularly regarding the distribution and promotion of their music. The market capitalization of Believe amounts to approximately 990 million euros while the title trades at half the level of its introduction in June 2021.
* OVH jumped 6.6%. The stock was supported by the presentation of the new strategic plan ‘Shaping the Future’ and the financial objectives for 2026. For Oddo BHF, this roadmap responds to concerns about OVH’s ability to generate cash while leverage of the balance sheet is now above 2x (IFRS net debt / EBITDA). This is a major change from the previous IPO roadmap in 2021 which focused on accelerating organic growth (target = +25% in FY 25) before being definitively abandoned last year. There now remain issues of critical size in an environment where competition from American hyperscalers is still unfair and where new entrants are appearing in Europe, explains the analyst. SocGen, for its part, raised its target from 10 to 12 euros while remaining ‘purchase’, while Morgan Stanley (‘online weighting’) adjusted the target from 8.3 to 9.1 euros .
* Vallourec advance of 4.5%. The firm signed a contract with TotalEnergies for the supply of casing and tubing tubes as well as associated accessories for the first phase of the Gas Growth Integrated Project (GGIP) in Iraq. The GGIP includes the recovery of gas currently flared in the Basra region to power power plants, the construction of a seawater treatment unit and the construction of a solar power plant with a capacity of 1GW. This multi-energy approach will make it possible to sustainably develop the country’s natural resources. A supplier to TotalEnergies for many years, Vallourec has been able to draw on its long experience in Iraq to present to its historic partner a competitive premium offer covering all its OCTG needs.
* AXA increased by 3.9%. Several analysts adjusted their objective on the file as the insurer’s annual publication approached. Morgan Stanley thus raised its target price from 36 to 37 euros while remaining ‘overweight’ while Kepler Cheuvreux reduced the slider from 35 to 34 euros (‘buy’).
* Publicis rose 1.7%. It must be said that Goldman Sachs has gone ‘buy’ on the group while increasing its target from 89.3 to 106.1 euros. The investment bank believes the company’s superior execution, leading financial performance and potential for capital redeployment warrant a re-rating. Furthermore, GS considers the balance sheet to be very flexible, with a net debt-to-EBITDA ratio of just 0.1 times in 2023, and forecasts cumulative free cash flow generation of €11 billion over the next five years , of which 4.6 billion euros could be excess liquidity.
Conversely, * Atos drop of 30% and brings its losses since the start of the year to more than 50%! While there is great uncertainty around the IT services company, short sellers are having a field day. According to ‘Bloomberg’ data, at least 10 ‘shorters’ have disclosed short positions in the stock of the company now led by Paul Saleh. The disclosed short positions represent 14.4 million shares, or 12.94% of the company’s outstanding shares. Astaris Capital Management LLP holds the largest short position (3.52 million shares).
* Forvia plunges 18.5%. Deutsche Bank lowered its target from 27 to 25 euros but confirmed its ‘buy’ rating. The end of 2023 was weighed down by the negative impacts of the strike in the USA, unfavorable exchange rates as well as the ongoing negotiations on the resumption of inflation. That said, the results for the year should be fully in line with forecasts for 2023. For 2024, the broker estimates that Forvia should achieve an average organic outperformance of 5%, while currency and scope effects will be negative. With improvements from discontinued operations and realization of synergies, the broker expects Forvia to guide a decent improvement in its margin for the current year. For the auto parts supplier sector, DB is reducing its estimates for 2024 to reflect continued inflationary pressure and a zero production growth environment.
* CGG collapsed by 16.9%, to a historic low. The geophysical services provider was abandoned after Kepler Cheuvreux downgraded the file to ‘keep’ with a target reduced from 1.5 to 0.7 euros. “Although the company has key assets and positions, particularly in the equipment and geosciences divisions, the dynamics of the multi-client sector are structurally limited by the industry’s concentration on existing areas,” the broker says.
* Ubisoft stumbles by 10%, on a low of almost a year. Cantor Fitzgerald began monitoring the file with a ‘neutral’ opinion and a target of 25 euros. The broker sees limited near-term upside potential on consensus estimates and believes the video game publisher looks expensive relative to its peers on some metrics. The analyst is positive on the long-term outlook as Ubisoft advances its strategy focused on core franchises and ‘mega-brands’, but says it still has “a lot of work to do.” announced that Ubisoft+ Multi Access and PC Access are becoming Ubisoft+ Premium which will offer new features upon release and early access (where applicable), as well as premium editions, monthly rewards, and more. Ubisoft also offers a new offer: Ubisoft+ Classics on PC, and its selection of old and newer titles.
* Dassault Aviation loses 9.9%, punished following the announcement of orders and deliveries lower than expected in 2023… “The end-of-year rebound that we expected did not materialize, because the problems of supply chain continued to restrict Falcon production. The 65% drop in Falcon order intake is more worrying: the resulting 4% decline in the order book should be compared with North American competitors posting in average growth of 5-6% in the first 9 months of 2023. While Rafale performance remains strong, Falcon underperformance has led us to reduce our FY23 EBIT estimates by 30% and our FY24 and FY26 EBIT estimates of 7-10%,” Deutsche Bank explains. The broker thus downgraded the stock to ‘hold’ with a target reduced from 216 to 199 euros.
* Plastic Omnium drops 9.3% after the announcement of the appointment of Olivier Dabi to the position of Chief Financial Officer as of February 1, 2024. He joins the Management Committee of Plastic Omnium. He succeeds Kathleen Wantz-O’Rourke who is leaving the Group for new professional projects. On the analyst front, Kepler Cheuvreux adjusted its target from 13 to 12 euros while remaining ‘hold’.