Fannie Mae, Freddie Mac shares tumble after conservatorship comments
On Tuesday, BofA Securities adjusted its stance on GEA Group AG (G1A:GR) (OTC: GEAGY), downgrading the company’s stock rating from Buy to Underperform and reducing the price target from EUR 60.00 to EUR 52.00. The decision by the firm’s analysts comes amid concerns regarding a weaker capital expenditure cycle in the Food & Beverage sector, particularly in the United States and China, which are GEA’s two largest markets.
The analysts at BofA Securities also highlighted risks to the company’s margin expansion due to the potential impact of European tariffs and challenges in project execution. They noted that the current full valuation of GEA Group’s shares is at a ten-year high compared to the sector, despite the consensus forecast that anticipates a 50 basis points margin expansion annually from 2025 to 2027.
The revision in GEA Group’s stock outlook is also based on a reassessment of the company’s operational risks and demand prospects. BofA Securities analysts have adjusted their EBITDA estimates for GEA Group downward by 3% for the years 2025 and 2026. They now value the stock at 12 times the projected 2026 enterprise value to EBITA (EV/EBITA), which represents a 10% premium over the sector, reduced from the previous 20%.
In their report, the analysts expressed skepticism about the justification for GEA Group’s valuation premium, given the identified demand and operational risks. The new price target of EUR 52.00 reflects the firm’s revised valuation approach and outlook for the company.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.