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Investing.com - Morgan Stanley downgraded Vinci SA (EPA:DG) stock rating from Overweight to Equalweight on Tuesday, while slightly reducing its price target to EUR138.00 from EUR139.00. Despite the downgrade, InvestingPro data shows Vinci is slightly undervalued based on Fair Value calculations, with the stock trading at a P/E ratio of 14.7.
The investment bank cited concerns about slowing growth and diminishing margin expansion potential in Vinci’s key business segments, Vinci Energies/Cobra and Vinci Airports, which represent approximately 60% of Morgan Stanley’s target enterprise value. This contrasts with Vinci’s overall revenue growth of 3.26% over the last twelve months and its impressive YTD price return of 42.27%.
Morgan Stanley noted these core businesses are "losing some of their shine" due to several factors including capital expenditure build-up in the Airports division, free cash flow normalization, and a slowdown in merger and acquisition activity.
The research firm indicated Vinci now demonstrates a "more average growth algorithm versus peers," leaving little room for relative re-rating, while "earnings momentum remains elusive" across the group.
Morgan Stanley expressed a preference for Eiffage within French contractors, maintaining an Overweight rating with a price target of EUR168 for that company, representing approximately 40% potential upside.
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