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Investing.com --Macquarie downgraded Seven & i Holdings to Neutral from Outperform after Alimentation Couche-Tard withdrew its takeover bid, removing a key catalyst for the stock and shifting focus back to the company’s standalone outlook.
The brokerage cut its price target by 23% to ¥2,000, citing a lower valuation multiple now that a deal is off the table.
It said Seven & i should be valued independently, with near-term upside tied to execution rather than strategic alternatives.
Couche-Tard’s decision followed what it described as a lack of good faith engagement from Seven & i.
In response, the Japanese retailer reiterated plans to pursue its own strategy, including a public listing of 7-Eleven Inc. (SEI) and up to ¥2 trillion in share buybacks by fiscal 2030.
Macquarie said the buyback plan is a positive, but noted the benefits of an SEI IPO remain unclear given potential earnings dilution from minority interests.
It also flagged soft recent performance at both SEI and Seven-Eleven Japan, with U.S. same-store sales falling 0.9% and Japanese same-store sales rising just 0.6% in the latest quarter—well below rival Lawson’s 4.3%.
While Macquarie raised its current-year profit estimate slightly after factoring in first-quarter results, it left outer-year forecasts unchanged, saying a full earnings recovery remains some distance away.
“We downgrade Seven & i from Outperform to Neutral to reflect Alimentation Couche-Tard’s announcement to withdraw its takeover bid,” analyst at Macquarie said.