On Monday, Berenberg updated its outlook on Ipsos SA (IPS:FP) (OTC: IPSOF) shares, reducing the price target to EUR87.00 from the previous EUR89.00 while maintaining a Buy rating on the stock.
The adjustment follows Ipsos' announcement of headwinds in the United States market, particularly influenced by the upcoming presidential election and a deceleration in the pharmaceutical sector.
Ipsos management has consequently revised its organic revenue growth forecast down from 4% to 3% for the fiscal year 2024, although it has retained its margin goal of approximately 13%.
Despite the lowered revenue growth guidance, the firm's strong operating leverage is anticipated to mitigate the impact on the fiscal year 2024 earnings per share (EPS), with a projected decrease of only 3%.
The market challenges in the U.S. are a significant factor in the revised expectations for Ipsos, as the company navigates the uncertainties surrounding the presidential election and the pharma industry's slowdown. Nonetheless, the maintenance of the margin objective suggests a level of resilience in the company's financial planning.
The company's ability to maintain its profitability targets in the face of reduced revenue growth indicates an effective management of operational costs and investments. This operational leverage is a key component in Berenberg's analysis, suggesting that Ipsos is still positioned to deliver value to its shareholders despite the current challenges.
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