On Sunday, Goldman Sachs adjusted its stance on TeamViewer (ETR:TMV:GR) (OTC: TMVWY), downgrading the stock from Buy to Neutral and reducing the price target to €12.00 from the previous €17.00. The revision follows TeamViewer’s announcement on December 10 regarding the planned acquisition of 1E, a move that has influenced the company’s capital return strategy. According to the investment bank, the acquisition’s effect on TeamViewer’s earnings per share (EPS) is estimated to be an adjusted increase of 1%-14% for the years 2027-2028.
Goldman Sachs’ earlier Buy rating was based on TeamViewer’s potential for growth and strong cash generation, which could have led to share buybacks and attractive capital returns. Although the firm still sees potential for growth improvement, it expresses concerns about the impact on shareholder returns due to the company’s shift in focus towards mergers and acquisitions (M&A) as opposed to buybacks.
TeamViewer’s stock has experienced a significant devaluation, approximately 25% following its third-quarter results in 2024, and is currently trading at what Goldman Sachs considers trough multiples. The bank suggests that until there is concrete evidence of accelerated growth, the market is likely to remain cautious, balancing the potential benefits of M&A against the prospect of more constrained capital returns.
The revised price target of €12 reflects Goldman Sachs’ view of the uncertainties surrounding TeamViewer’s capital return outlook, especially considering management’s openness to exploring alternative strategies for deploying capital. The new valuation implies a less compelling upside compared to other stocks covered by the investment bank, which has led to the downgrade to Neutral.
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