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On Wednesday, HSBC analysts made a notable adjustment to their outlook on La Francaise des Jeux SAEM (FDJ:FP), downgrading the stock rating from "Hold" to "Reduce."
The rating change by HSBC analysts, reflects concerns about the company's future performance in light of recent developments. HSBC now includes Kindred in its forecasts for FDJ, following the latter's integration since October 11.
Kindred is being valued at a discount to its acquisition price, indicating a cautious stance by the analysts.
Accompanying this change, the price target was also revised downward to EUR30.70 from the previous EUR36.00. The revised price target represents a reaction to the perceived regulatory risks that are emerging within FDJ's core markets.
These risks, according to HSBC, have not been properly accounted for in the current share price. With an implied downside of approximately 14%, the downgrade to "Reduce" suggests that HSBC sees potential challenges ahead that could significantly impact FDJ's profitability.
HSBC's analysis points to uncertainties that may materially lower group profits for FDJ. These uncertainties are primarily linked to regulatory changes that could affect the company's operations and financial outcomes.
The analysts believe that the market has not yet fully recognized these risks, prompting the revision of their recommendation.
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