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On Monday, Deutsche Bank (ETR:DBKGn)’s analyst Christoph Laskawi revised Forvia SE’s (FRVIA:FP) price target downward to EUR12.50 from the previous EUR15.00, while continuing to recommend a Buy rating for the stock. Laskawi’s commentary followed Forvia’s release of its second-half 2024 financial results, which aligned with market expectations. However, the company’s forward guidance fell short of consensus estimates, prompting a negative reaction from investors.
Forvia’s decision to slash its dividend and postpone asset sales until 2026, thereby delaying significant debt reduction, was met with disappointment. During a conference call, management disclosed that they are in the midst of preparing for substantial disposals, potentially exceeding EUR1 billion in a single deal. Although the delay is seen unfavorably, Laskawi notes the company’s intensified focus on its core business and the drive to streamline its portfolio as positive moves.
Moreover, management has once again dismissed the possibility of a capital increase, reaffirming their prior commitments. Laskawi anticipates that Forvia’s shares may experience increased volatility leading up to the first quarter of 2025, as investors await the impact of the company’s cost-saving initiatives and cash generation efforts, which are expected to be reflected in the first-half 2025 financial report. Despite the delay in disposals and the likelihood of a softer revenue report for the first quarter of 2025, the analyst considers the recent sharp decline in Forvia’s share price to be an overreaction.
The valuation has been adjusted to reflect expectations for 2025, resulting in the new price target of EUR12.50. This adjustment takes into account the latest developments and anticipates future financial performance, as Forvia continues to navigate its strategic initiatives and market challenges.
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