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On Wednesday, Goldman Sachs adjusted its stance on JCDecaux SA (DEC:FP) (OTC: JCDXF), downgrading the stock from Buy to Neutral and reducing the price target to €20.10 from €24.20. Lisa Yang, the analyst at Goldman Sachs, cited a combination of near-term risks as the rationale behind the downgrade. These risks include the uncertain macroeconomic environment and the timing of margin recovery for the company.
JCDecaux, a market leader in out-of-home (OOH) advertising, is recognized for its potential to capitalize on the medium’s solid long-term growth prospects. Despite this, Goldman Sachs now anticipates challenges that could impact the company’s performance in the near future. Specifically, Yang pointed out that JCDecaux will likely face tough comparative figures through the second and third quarters due to the previous year’s Euros and Olympics events. These events are expected to create a headwind to group organic growth, estimated at approximately 50 basis points for the Euros and 250 basis points for the Olympics.
The analyst also noted that these headwinds are not fully accounted for in the current consensus. Nevertheless, Goldman Sachs still sees a clear path for JCDecaux’s free cash flow (FCF) to return to pre-Covid levels. This optimism is based on the expectation that capital expenditures will normalize, with the company exercising greater discipline in its investments, especially in non-digital capital expenditures.
Goldman Sachs’ forecast for JCDecaux’s 2026 FCF stands at €305 million, which aligns with the company’s own target of over €300 million. This projection reflects the firm’s belief in JCDecaux’s ability to achieve its financial goals despite the near-term risks that have led to the adjustment in stock rating and price target.
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