RBC cuts Klepierre on negative EPS prospects, high valuation

Klepierre SA

25/09/2023 07:49

** RBC cuts French retail operator Klepierre  LOIM.PA  to
"underperform" from "sector perform", citing high valuation and
weaker economic growth that could weigh on EPS for years
    ** The shares have outperformed European retail by 39% over
the last five years, reflecting the management's positive
impact, RBC says
    ** This has resulted in the stock trading on a demanding
multiple at a time when EPS growth is negative, it adds
    ** The broker expects Klepierre's EPS to keep declining for
at least five years
    ** "Any impact on consumer spending from tougher macro
economic conditions risks exacerbating the impact on
demand/supply dynamics and thus rent" -RBC
    ** RBC sees EBITDA declines of around 2% per year, and says
higher average cost of debt will likely offset interest expense
savings from lower debt by end-2027
    ** Any notable decline in property values could lead to
additional downward pressure on EPS from disposals, it adds
    ** Of 21 analysts polled by LSEG, eight rate Klepierre
"strong buy" or "buy", five "hold", and eight "sell" or "strong
sell"

 (Reporting by Pierre John Felcenloben)
 ((Pierrejohn.felcenloben@thomsonreuters.com))