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On Monday, BofA Securities announced a downgrade of Veolia Environnement (OTC:VEOEY) SA’s stock rating from Buy to Neutral, alongside a reduction in the price target from EUR37.00 to EUR30.00. The adjustment by analyst Alexandre Roncier reflects concerns over the potential impact of the current political climate on the economic environment, which could affect the company’s performance. The $24.6 billion market cap utility giant, which has seen its stock rise 22.3% year-to-date, currently trades at a P/E ratio of 17.7x.
Veolia, which operates in the waste and energy sectors, is considered to have shown some resilience organically in early 2025. According to InvestingPro data, the company has maintained dividend payments for 25 consecutive years, currently offering a 2.95% yield. Despite the company’s limited direct exposure to tariffs, BofA Securities anticipates possible downside risks to Veolia’s organic growth. As a result, the firm has revised its net income forecasts downward by 5% for 2025 and by 10% for the years 2026-2027, aligning with consensus estimates.
The revised price objective for Veolia’s shares now stands at EUR30, a decrease from the previous EUR37. This change not only reflects lowered expectations but also incorporates some changes in methodology. The corresponding American Depositary Receipt (ADR) price target has also been adjusted, now set at $16.5, down from $19.0.
The downgrade to Neutral from Buy is justified by the lack of immediate catalysts that could potentially drive a re-rating of Veolia’s shares in the near term. BofA Securities also notes the possibility of future consensus downgrades, further justifying the cautious stance on the stock.
In other recent news, Veolia Environnement SA has been the subject of differing analyst opinions. Citi analysts downgraded Veolia’s stock from Neutral to Sell, adjusting the price target to €26.40 due to concerns about a potential global recession. They noted that Veolia’s earnings are closely linked to industrial activity, which might be impacted by economic slowdowns and trade tensions. Conversely, Bernstein initiated coverage on Veolia with an Outperform rating and a price target of €38.00. Bernstein’s analysis points to Veolia’s valuation discount and potential for earnings and dividend growth, supported by global trends. They highlighted Veolia’s forward P/E ratio and dividend yield as favorable for investors. Bernstein’s price target is based on a Discounted Cash Flow analysis, factoring in growth prospects and economic conditions. These recent developments reflect varying perspectives on Veolia’s market performance and future potential.
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