2023-08-04 14:00:00
(Photo credits: Atos – )
Atos, a French company specializing in digital transformation, has been in the headlines for several days as investors heavily penalize the company following the publication of its half-year accounts. Since Thursday July 27, 2023, the Atos share has indeed lost more than 45% on the stock market.
Is the severe fall in Atos share price justified? What are the company’s plans to improve its performance? Is it the right time to invest in Atos shares? Discover our analysis and our opinion on the Atos share.
The descent into hell of Atos shares since the publication of its 2023 half-year figures
After dropping more than 22% on Friday July 28, 2023, Atos stock continues to lose ground in significant trading volumes this week with a weekly decline of more than 28%. What to remember from the figures and comments of Atos when publishing its financial results?
Atos net debt and loss widens
Since the publication of its latest results on Friday July 28, 2023, investors have focused on the widening of the French company’s net debt, which increased by more than 29% to reach -2,321 million euros at the end of June 2023 ( once morest -1,792 million euros at the end of June 2022), and on the net loss which widened by more than 19% compared to the same period in 2022: -600 million euros once morest -503 million euros .
Atos free cash flow also disappoints
Investors also heavily penalized Atos shares due to the company’s “cash consumption” in the first half of 2023. Atos’ H1 2023 free cash flow was significantly more negative than that of last year (969 million euros once morest 555 million euros) and than expected (969 million euros once morest 680 million euros).
Atos half-year results report also shows positives
The Atos business shows an improvement in its operational performance in H1 2023 thanks to a strong increase in book-to-bill ratio of 112% in Q2 2023 (vs. 73% in Q1 2023), a growth of the group of +2.3% in H1, an operating margin that more than tripled in H1 to 3.8% of revenue and annual objectives that have been revised upwards (organic growth and operating margin expected to increase between 0% and 2% (vs. -1% to +1% previously) and 4% and 5% respectively).
It is also worth pointing out that during the Investor Day 2022, the Atos company had highlighted the importance of normalizing its working capital requirement and the increase in costs due to the preparation of the demerger of the company. into two entities, as well as their consequences on the figures for 2023. The amounts of their impact on Atos’ cash flow had therefore already been announced last year.
Atos: the sale of Tech Foundations might bring a breath of fresh air to the French IT group
Atos hopes to be able to turn the page on several years of crisis by selling its historic outsourcing activities, grouped under Tech Foundations, to the EP Equity fund of billionaire Daniel Kretinsky (who has already participated in the rescue of the Casino group) for an amount of 100 million euros (i.e. a valuation of Tech Foundations of 2 billion euros).
Although this decision is still subject to the approval of Atos shareholders, it might bring a breath of fresh air to Atos and allow it to focus on these structural changes. When it is “rid” of its historical branch, Atos will indeed be able to intensify the growth of its new activities in cybersecurity, digital transformation and big data.
Technical analysis of the Atos share price
Atos shares lost more than 12% over the day and more than 44% over the week.
Currently, the Atos share is trading around 7.596 euros, close to its lows reached in September 2022. Since the beginning of 2023, the Atos share has lost almost 18%. The drop in the Atos share reached more than 32% over 1 year and more than 90% over 5 years.
The next support for Atos shares is close to 7.18 euros (former floor price reached on September 26, 2022), while the rise in Atos stock prices might be slowed down by resistances located around 10.495 euros and of 12,360 euros.
Graphical analysis of the Atos share
Source : TradingView
Our opinion on the Atos share
Is the recent drop in Atos stock prices really justified in view of the figures announced?
Although some financial data has deteriorated and is below market expectations, Atos financial figures do not appear to paint an alarming picture. Some news is even positive, such as the improvement in the company’s operating margin or the raising of its annual objectives.
Moreover, the announcements made during the Investor Day 2022, and during the plan to split the Atos company, seemed to prepare the ground for the current deepening of its debt.
By selling Tech Foundations, Atos will become Eviden. The confirmation of this split should allow it to refocus on the development of its profitable and buoyant activities such as intensive computing, digital, data analysis and cybersecurity.
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