2023-10-26 09:00:00
As the third-quarter 2023 earnings season gathers pace this week, many companies have already shown signs of fragility, in an economy where inflation and high rates are weighing on growth prospects.
In this article, let’s discover 3 French companies whose stock market prices fell sharply following a profit warning. Should you buy these shares following the profit warning?
What is a profit warning?
A profit warning is an announcement by a publicly traded company that its financial results are expected to fall short of investors’ initial expectations.
Profit warnings are frequently a reflection of an underlying problem within a company or a broader economic problem, but they can also simply be synonymous with a simple reassessment of the short-term prospects of said company.
Although profit warnings are not new, they always make investors react. It is therefore interesting to know how to identify good from bad declines following a profit warning.
Alstom shares on the stock market: – 31.39% since January
Free cash flow ultimately negative for Alstom
The French high-speed train maker sharply reduced its free cash flow forecast. On October 5, 2023, Alstom warned markets that it now expected negative free cash flow of €500 million to €750 million for this year, representing a significant change from its earlier forecast of a negative free cash flow of €500 million to €750 million for this year. “clearly positive” cash flow.
This profit warning was in part triggered by an increase in inventories of parts and materials to avoid supply chain disruptions and delivery delays, delays by UK customers in receiving deliveries and payments, a reduction in advances received for signed contracts and the weakness of new orders.
Graphical analysis of Alstom shares on the stock market
Source : TradingView
After the bearish gap of Thursday, October 5, 2023 and the fall that continued, Alstom shares (ALO) have lost more than 45% since the start of the month and are currently trading around 12.33 euros, close to their historic low. .
For some analysts, the volatility around Alstom shares and the reaction of investors to the company’s difficulties are excessive. On October 12, rating agency Moody’s affirmed Alstom’s Baa3 investment grade rating, but lowered its credit outlook from “stable” to “negative.”
Maisons du Monde shares on the stock market: – 40.14% since January
Maisons du Monde launches a profit warning before the publication of its half-year results
Maisons du Monde has faced strong volatility in recent years. First with the Covid-19 containment measures and now with high inflation, high interest rates and rising raw material costs. All of these elements weigh on the purchasing power of consumers and their decisions regarding discretionary spending, while also affecting the group’s profit margins.
This is why the company Maisons du Monde announced on October 10, 2023 that it will not achieve the financial objectives it had previously announced for 2023. It is now targeting an annual operating profit of 40-50 million euros. (compared to an initial estimate of 65-75 million euros) and a free cash flow of 20-30 million euros (compared to 40-50 million euros initially).
Graphical analysis of Maisons du Monde shares on the stock market
Source : TradingView
With the downward revision of its annual objectives, Maisons du Monde (MDM) shares reached a new low at 5.15 euros on October 16, 2023, causing its price to fall by more than 70% since its IPO in 2016. .
Since the profit warning of October 10, 2023, some analysts have reduced their price targets and downgraded the Maisons du Monde share to “neutral” like Oddo BHF or Exane BNP which are now targeting a Maisons du Monde share at 6.5 euros and 7 euros respectively (compared to 12 euros previously).
Sartorius Stedim Biotech share: – 37.39% on the stock market
Entreprise Sartorius : 2 profit warning en 2023
Sartorius AG and its subsidiary, Sartorius Stedim Biotech, lowered their financial forecasts for the full year 2023 on Thursday October 12. This decision follows the publication of their preliminary 3rd quarter results showing a rather poor performance with a 21% drop in revenue over the first 9 months of 2023 to €2.07 billion.
The company faces challenges including economic factors, uncertainties in the biopharma and biotech sector (as players reduce spending and production), and difficult comparisons with previous periods, since they benefited from strong demand linked to treatments once morest Covid-19.
Graphical analysis of the Sartorius Stedim Biotech share on the stock market
(Photo credits: Adobe Stock – )
Source : TradingView
The Sartorius Stedim Biotech (DIM) share experienced 3 major bearish gaps in 2023: April 20, June 17 and October 13. Since the last profit warning and the lowering of its medium-term outlook, Sartorius Stedim Biotech shares have been moving close to their lowest level since 2020, which it reached on October 16 at 177.35 euros.
Analysts have been pessimistic regarding the prospects of the parent company (Sartorius), and therefore its subsidiary Sartorius Stedim Biotech, since the publication of the results. On October 16, 2023, Jefferies confirmed its “neutral” opinion on the stock, but with a lowered share price, while Deutsche Bank and Société Générale advised selling the Sartorius Stedim Biotech share.
Many companies have announced profit warnings
Among other French companies having recently announced a profit warning, we find Orpea, Euroapi and Voltalia. But profit warnings also affect shares in other parts of the world such as Spisent Communications in the United Kingdom, Lonza in Switzerland and Stemmer Imaging in Germany.
Also find this article on Café de la Bourse
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