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Investing.com -- Edenred SA (EPA:EDEN) shares fell over 8% on Tuesday after the French payments and employee benefits group lowered its medium-term earnings growth targets and reduced its free cash flow goal, while maintaining its capital return plan.
The company set a new three-year ambition for 2026 to 2028 of 6% to 9% like-for-like EBITDA growth, compared with its earlier target of more than 12%.
The guidance includes the impact of Italy’s commercial cap and marks a slower start in 2026, when growth is expected between 2% and 4%, before accelerating to 8% to 12% in 2027 and 2028.
Jefferies said this phasing could lead to “some downgrades to EBITDA,” noting its own estimate sits 4% lower for 2026.
Edenred also reduced its free cash flow conversion target to above 65%, down from above 70%, citing an updated capital allocation framework.
The company maintained its long-term goal of reaching €5 billion in revenue by 2030, which implies an 11% compound annual growth rate from 2025 estimates.
In unveiling its new “Amplify” strategy, Edenred outlined three main initiatives. The first, “Attract,” aims to expand underpenetrated markets through customer acquisition and a more efficient commercial approach.
The second, “Enrich,” focuses on broadening services to increase average solution penetration to 2.5 per customer by 2028. The third, “Activate,” seeks to lift the average amount spent by its 60 million users, with the goal of raising average revenue per user from €46 to €70 by 2030.
The company also reiterated its “Fit for Growth” cost-efficiency program, now coupled with product innovation and use of artificial intelligence to improve operating leverage.
Edenred’s cost structure remains about 60% fixed, and its global workforce of roughly 12,000 employees is unchanged from 2024.
Edenred plans to invest €1.8 billion in operating and capital expenditures over the next three years, or around €600 million annually, a level Jefferies said “seems to be below the previously disclosed trend of accelerating spend.”
Between 6% and 8% of total revenue is expected to go toward capital expenditures, compared with a 7.5% average from 2022 to 2024.
There was no change to Edenred’s capital return policy. The company confirmed its ongoing €300 million share buyback program, with €100 million expected to be completed by the end of 2025, and did not announce any changes to its dividend policy.
Total capital return in 2025 is projected to fall to about €420 million, down from €607 million in 2024, despite the company’s shares trading below last year’s levels.
For 2026, Jefferies forecast operating revenue to grow 4% like-for-like to €2.84 billion, with total revenue at €3.05 billion, and EBITDA up 1% like-for-like to €1.36 billion, representing a 45% margin. Free cash flow conversion is expected to reach 62%, or €844 million.