Metro plummets as Baader cuts rating due to unfavorable market trends

Metro AG

03/10/2022 09:09

** Shares in Metro AG  B4B.DE  slump around 14% to over
2-year lows after Baader Helvea downgrades the German wholesale
retailer to "reduce" from "add", citing "dull" retail sector
outlook in the weakening consumer climate
    ** Metro's core customers are hotels and restaurants, and
the broker says higher price inflation will likely affect
consumers' ability and willingness to spend, especially in
regards to discretionary spending, which should include
restaurant visits
    ** Baader Helvea adds the overall cost situation is
worsening on basically all lines of retailers' P&L, including
material, energy, freight and personnel
    ** It cuts its earnings estimates for 2022/23 and 2023/24 as
the post-pandemic recovery in the hospitality sector will likely
cool, slashing target price by 33% to EUR 6
    ** It adds, though, it welcome CEO's strategy to invest in
digitalization, distribution capabilities and sales people,
which already led to revenue improvements
 (Reporting by Ozan Ergenay)
 ((ozan.ergenay@thomsonreuters.com))