UBS cuts Gestamp to "sell" on challenging FCF outlook

Gestamp Automocion SA

03/12/2024 13:18

** UBS cuts Spanish auto parts manufacturer Gestamp
Automocion  GEST.MC  to "sell" from "neutral", citing
challenging short-term industry concerns, muted LVP growth and
increasing fixed costs
    ** It says Gestamp's large exposure to global OEMs, in
particular to the Germans, may face issues due to low European
demand and reduced BEV forecasts, areas where Gestamp has
increased investments in recent years
    ** In the US, operational issues continue to drag on margins
despite improvement in efforts, while in China, global OEMs face
declining market share each quarter due to increasing
challenges, it adds
    ** UBS thinks the company cannot generate solid FCF in the
near term as lower client activity and capex seem to be detached
    ** "OEM start of productions have not been abandoned but
rather delayed or downsized, hence agreed investments for
ongoing projects cannot be stopped," it explains
    ** Broker believes the current share price reflects a more
optimistic scenario
    ** Out of 14 analysts that cover Gestamp, nine rate the
stock "strong buy" or "buy," ​and five rate "hold" - LSEG
    
  

 (Reporting by Marta Serafinko in Gdansk)
 ((Marta.Serafinko@thomsonreuters.com; +48 58 769 66 00;))