Jefferies cuts Cancom on limited drivers post outlook cut, KBC takeover

Cancom SE

29/08/2023 12:35

** Jefferies downgrades German provider of IT infrastructure
and services Cancom  COKG.DE  to "hold" from "buy" on limited
catalysts following a recent outlook cut and its acquisition of
KBC Beteiligungs
    ** The broker says the guidance cut suggests further market
share losses vs larger peers
    ** Concerns about the KCB acquisition centred around
unexpected shareholder dilution, weak profitability levels and
limited short-term synergies, the brokerage says
    ** Cancom agreed to buy the Austrian ICT solutions and
service provider in April
    ** The broker notes the management has so far failed to find
a way to materialise accretive M&A that would satisfy
shareholder requirements
    ** Although supply chain disruptions have eased, Jefferies
does not expect a significant change in product mix within the
group's core portfolio excluding KBC
    ** It says the new management needs to establish a better
execution track record, putting emphasis on cost cuts, KBC
synergies, and a return to sustainable bottom-line growth
    ** Out of 10 analysts that cover Cancom, three rate the
stock "strong buy"/"buy",​ six "hold" and one "strong sell" -
Refinitiv data

 (Reporting by Mateusz Dobrzyniewski)
 ((Mateusz.dobrzyniewski@thomsonreuters.com))