On Thursday, Goldman Sachs adjusted its price target for OVH Groupe SAS (OVH:FP) shares, a company listed on the Euronext Paris stock exchange, reducing it to €5.00 from the previous €7.50. Despite acknowledging the company's potential to capitalize on the growing multi-cloud market and increasing data sovereignty concerns, the firm maintains a Sell rating on the stock.
The revision reflects Goldman Sachs' view of OVH as a contender in the competitive cloud industry, which includes major players like Microsoft (NASDAQ:MSFT) Azure, AWS, and Google (NASDAQ:GOOGL) Cloud Platform.
These competitors are noted for their adaptability in meeting European regulatory requirements. The analyst cites a dynamic competitive landscape and risks related to growth reacceleration in Europe as reasons for the lower price target.
Goldman Sachs has recalculated the 12-month price target based on a reduced enterprise value to earnings before interest and taxes (EV/EBIT) multiple. The new target suggests a circa 5% downside from current levels. The decision to maintain the Sell rating is influenced by the decreased visibility over the anticipated reacceleration of public and private cloud growth in the European market.
The analyst's comments underscore the less attractive valuation of OVH Groupe compared to other companies covered by Goldman Sachs. While OVH's stock presents a downside of approximately 3%, the average upside for the sector is estimated at around 26%. This contrast further justifies the firm's cautious stance on OVH Groupe's shares.
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