S&P 500 pulls back from record high as chip-led slump in tech weighs
Investing.com -- Berenberg has downgraded Groupe SEB (EPA:SEBF) to “hold” from “buy” and cut its price target to €88 from €106, citing a more challenging near-term outlook and a lack of clear catalysts.
The decision follows weak Q1 results, with operating result from activity (ORFA) falling 54% year-over-year.
The company blamed FX impacts, but Berenberg highlighted this decline as particularly concerning given Q1’s typically low contribution, just 13%, to full-year profit.
Second-quarter profitability is expected to be similarly pressured due to poor U.S. sell-in and recently implemented tariffs.
U.S. tariffs on steel and aluminum, raised to 50% in June, are expected to significantly impact SEB’s cookware segment, which comprises about 70–80% of its U.S. sales and 30% of total group revenue.
Though SEB aims for 10–15% price increases with retailers, Berenberg warned that end-demand could weaken once lower-cost inventory is depleted.
Beyond tariffs, SEB faces structural issues. Its European small domestic appliance business, 35% of sales, continues to struggle against more agile competitors like SharkNinja.
Although improvements have been seen in air frying, stick vacuums, and garment steamers, Berenberg described innovation efforts as incomplete. The coffee appliance segment, led by the Krups brand, also remains under pressure.
China, accounting for 23% of sales, posted 3.5% growth in Q1 2025. Management expects this recovery to continue into Q2, supported by broader-based momentum and government stimulus.
However, Berenberg sees only mid-single-digit growth ahead, noting continued macroeconomic weakness and price sensitivity.
In terms of forecasts, Berenberg projects 2025 revenue growth of 1.3%, below the consensus estimate of 3.2%.
It expects ORFA to decline by 2.9%, against consensus growth of 2.6%. To meet consensus, SEB would need to post a 21% ORFA increase in H2, an outcome Berenberg views as unlikely, forecasting instead 13% growth.
The brokerage is 5–6% below consensus on mid-term ORFA and 2–3% below on mid-term sales.
The downgrade follows a third consecutive reduction in SEB’s price target this year, down from €132 in January and €121 in February.
Berenberg now sees SEB trading at 7.5x EV/EBITDA for 2025, broadly in line with peers De’Longhi and Newell Brands.
While some FX relief may come later in the year from a weaker U.S. dollar and Chinese yuan, Berenberg noted these benefits may lag due to inventory cycles and hedging.
The brokerage also flagged ongoing pressure on SEB’s cookware coatings, regulatory risks, and execution uncertainty.
Despite long-term structural strengths, including market leadership in 65% of its markets and a 3.7% sales CAGR projected from 2025–2027, Berenberg added that Groupe SEB is currently “fighting on too many fronts”.