Index falls as earnings results weigh; pound above $1.33, Bodycote soars
On Tuesday, JPMorgan made a significant adjustment to Carrefour SA’s (CA:FP) (OTC: OTC:CRRFY) financial outlook, reducing the price target from €14.00 to €12.00 while maintaining an Underweight rating. The firm’s analyst cited persistent operational and debt management issues as reasons for the adjustment, which could continue to pressure the stock.
Carrefour (EPA:CARR)’s stock has shown resilience year-to-date, trading within a consistent range despite a missed third-quarter report and deteriorating market conditions in the fourth quarter of 2024. However, JPMorgan’s analysis suggests potential downside in the FY24 results and FY25 outlook, with expectations for the second half of 2024 and full years 2025 and 2026 deemed unrealistic by the firm.
JPMorgan’s revised stance includes a cautious perspective on Carrefour’s financial management, particularly highlighting the company’s high debt levels, which stand at 3.5 times adjusted debt to EBITDAR (Earnings Before Interest, Taxes, Depreciation, Amortization, and Restructuring or Rent Costs). The firm anticipates that management might need to reduce shareholder returns in FY25 and FY26 to address the debt concerns.
Despite leaving net sales expectations largely unchanged, JPMorgan has lowered its projections for margins and cash flow. The firm also noted that its forecasts for FY24 and FY25 are decidedly below the company’s own guidance and double-digit percentages below consensus estimates among other analysts.
The report concludes with JPMorgan reiterating its Underweight recommendation for Carrefour’s stock and placing it on the Negative Catalyst Watch list, indicating a cautious outlook for the company’s performance in the near term.
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