DB cuts Cancom ahead of possible 'inward-looking year of restructuring'

Cancom SE

03/04/2023 12:01

** Deutsche Bank downgrades Cancom  COKG.DE  to "hold" from
"buy" as it rolls over its valuation by one year, reduces its
earnings forecast, and expects weighted average cost of capital
(WACC) to rise around 50 bps during an "inward-looking year of
restructuring"
    ** Despite the measures announced by the German provider of
IT infrastructure and services to increase profitability, DB
finds details shared so far very vague and the additional
information on the analyst call of only limited usefulness
    ** DB adds that while competitors seem well positioned to
fully focus on and benefit from the underlying market growth
that German digital association Bitkom is forecasting, Cancom
will probably have an inward-looking year of restructuring
    ** Bitkom, representing more than 2.000 companies of the
digital economy, forecasts sales in information technology of
EUR 126.4 bln for 2023 (+6.3% Y/Y) 
    ** The FY23 guidance published on March 30 implies a growth
in revenue and EBITDA between 5% and 13% Y/Y but according to
the broker this is a "slight disappointment"
    ** CANCOM's data centre/project business gaining full speed
again might take longer than originally anticipated, say the
brokerage that do not rule out an adjustment of medium-term
company's guidance either

 (Reporting by Paolo Laudani)
 ((Paolo.laudani@thomsonreuters.com))