On Monday, BofA Securities revised its rating on Alten SA (ATE:FP) (OTC: ABLGF), downgrading the stock from Buy to Underperform and adjusting its price target to EUR92.00 from the previous EUR125.00. The firm identified several challenges facing the company, including a slowdown in essential sectors that contribute significantly to its revenue.
These sectors include automotive, which accounts for 19% of Alten's revenue, aerospace with 16%, and life sciences with 8%. Further pressure comes from constrained IT budgets in the retail, services, public sector, banking, and insurance industries.
According to BofA Securities, despite a stabilization in the demand environment, discretionary IT spending continues to be subdued. This assessment aligns with insights from peers and is evidenced by the performance of Accenture (NYSE:ACN) in its fourth fiscal quarter.
Alten has reduced its fiscal year 2024 outlook three times within the year, and the firm expresses skepticism about Alten's ability to meet its revised organic growth targets of 0.5-1% following the first half of the year, especially in light of recent profit warnings from European automotive companies.
BofA Securities has also adjusted its expectations for Alten's organic growth in 2024 and 2025, forecasting no growth for 2024 and a 2% increase for 2025. These projections sit below the consensus, with the firm's revenue estimates for 2024 and 2025 being 2% and 3% lower, respectively.
For the third and fourth quarters, BofA Securities anticipates a decline in organic revenue of -0.9% and -0.8%, respectively, following a second quarter that saw a 1.0% increase.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.