On Thursday, Deutsche Bank adjusted its outlook on Compugroup Medical SE (COP:GR), reducing the price target to €20.00 from the previous €31.00. Despite this change, the firm maintained a Hold rating on the company's shares. The revision follows Compugroup's pre-release of disappointing second-quarter results and a significant reduction in their full-year 2024 guidance.
The company's performance was impacted by lower-than-expected non-recurring revenues, particularly from larger projects in the Ambulatory Information Systems (AIS) and delays in revenues related to the French Ségur initiative. The latter is now anticipated to commence in 2025 rather than the previously expected 2024.
Additionally, the Health Information Systems (HIS) segment is facing slower revenue recognition from projects under the German Hospital Future Act (GHFA), which is further constraining the company's organic growth for the year.
Deutsche Bank had previously signaled potential pressure on the full-year 2024 guidance in a downgrade note. However, the extent of the guidance reduction announced by Compugroup caught the firm by surprise. The revised forecast and the subsequent price target adjustment reflect the challenges faced by the company in achieving its expected financial performance.
The downgrade in guidance and the adjustment of the price target are indicative of the hurdles Compugroup is encountering, particularly in its project-based revenue streams.
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