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On Thursday, BNP Paribas (OTC:BNPQY) Exane analyst Francisco Ruiz downgraded the rating of Verallia SA (VRLA:FP) from Outperform to Neutral, maintaining a price target of EUR30.00. The adjustment follows a significant rise in Verallia’s share price, which has increased by approximately 30% since January 16th. This surge has diminished the potential for further gains towards the firm’s target price and has lessened the valuation gap between Verallia and its peer Vidrala (LON:0NV7).
Ruiz pointed out that the current market conditions in Europe, particularly the softening of volumes, could limit the likelihood of positive developments in the company’s fourth-quarter results, which are scheduled to be released on February 19th, or in its 2025 guidance. Despite the increase in share price being partly attributed to speculation regarding a possible bid from BWGI, the analyst emphasized that there is no certainty that such a bid will materialize.
The unchanged price target of EUR30.00 reflects the analyst’s view that, while the stock has performed well recently, the current market dynamics and company outlook do not warrant a more optimistic stance. The recommendation to move to a Neutral rating is a response to the recent appreciation in the share price and the narrowing of the discount compared to Vidrala.
Investors are now looking ahead to Verallia’s upcoming financial report and guidance to gauge the company’s performance and strategic direction amidst the challenging European market environment. While the potential bid from BWGI remains a topic of interest, its lack of certainty means it cannot be relied upon as a driver for the stock’s future performance.
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