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Investing.com -- Bernstein in a note dated Tuesday downgraded Valeo to “market-perform” from “outperform” after the supplier’s Capital Markets Day offered softer-than-expected guidance for 2026 and signaled that revenue growth would not accelerate until 2027.
The brokerage kept its €11 price target unchanged but said the stock’s 30% rise ahead of the event left “little upside,” especially after shares dropped 13% following the Nov. 20 guidance presentation in Paris.
Bernstein said that the reaction “well illustrates what happens in this environment to companies that do not shock and awe,” adding that management now faces what it called a “show me” period after missing earlier targets.
Bernstein said the company’s projection for 2028 requires a 3.9% compound annual revenue growth rate from 2025, implying 3.4 percentage points of outperformance against S&P Global’s 0.5% forecast for global light-vehicle production over the same period.
But Valeo has struggled to outperform the market in recent years; its implied outperformance was 3% in 2022, fell to 1% in 2023, was flat in 2024 and stood at 5% decline for the first nine months of 2025.
The brokerage wrote that 2026 is expected to be a flat year for revenue despite earlier messaging that order intake from 2022 through the first half of 2025 was 1.4 times OEM sales.
Valeo “admitted that it expects sales to be flat in 2026,” Bernstein said, calling the guidance “underwhelming” given the company’s need to accelerate sharply in 2027 and 2028 to reach its €22–24 billion revenue range.
Bernstein also noted that the 2025 guidance is far below what Valeo laid out at its 2022 capital markets day, when the company targeted €27.5 billion in sales for 2025, about 34% above today’s outlook, and aimed for a 6.5% operating margin, compared with the current 4.5%-5.5% guide.
The analysts pointed to CEO Christophe Périllat’s comments during the event as a signal that the pricing environment has shifted.
“Is there the same pricing power today? Now that the Chinese prices are becoming a kind of standard in the industry, I will not put it exactly this way,” he said, adding: “We have a margin power because we are adjusting to the price we have to have … but reducing our cost in a way that’s protecting our margin.”
Bernstein updated its estimates to reflect the company’s new trajectory, landing at €22 billion in 2028, the bottom of Valeo’s range, and forecasting a 5.7% operating margin that remains 30 basis points below the midpoint of the company’s 6%-7% target. The analysts said they expect consensus forecasts to fall in the coming weeks.
The brokerage said Valeo has made progress on restructuring efforts, particularly in its Power division, and pointed to R&D cuts and cost controls as positive drivers for profitability.
But Bernstein said evidence of stronger earnings from the order book is unlikely before the second half of 2026.
Applying a 7.6x EV/EBIT multiple to its 2026 estimate results in the unchanged €11 target. With limited potential return and uncertainty around Valeo’s ability to deliver the required revenue acceleration, Bernstein said it now expects the shares to remain “range-bound” until the company can demonstrate progress toward its 2027–2028 goals.