UBS cuts Gestamp to 'neutral' on soft sector prospects
05/12/2023 09:57
** UBS downgrades Spanish auto parts manufacturer Gestamp
Automocion GEST.MC to "neutral" from "buy" citing soft sector
outlook for 2024 and limited near-term support for the stock
** The broker points to challenging short-term industry
conditions, including lower electric vehicle (EV) penetration,
muted light vehicle production growth and rising fixed costs
** It expects legacy original equipment manufacturers to
hold back on certain investments, particularly related to EVs
** UBS adds it is unsure about Gestamp's willingness to
reduce investments and therefore its ability to generate solid
FCF in the near term
** The relevance of the company's 2027 targets is limited
given the timeline, and they appear demanding in the current
industry framework, the brokerage says
** Out of 15 analysts that cover Gestamp, eight rate the
stock "strong buy" or "buy" and seven "hold" - LSEG
(Reporting by Tiago Brandao)
((Tiago.Brandao@thomsonreuters.com;))