Synlab drops after Jefferies cuts to 'hold' over limited visibility on recovery

Synlab AG

16/02/2023 09:12

** Shares in Synlab  SYAB.DE  drop 3.5% after Jefferies cuts
the German laboratory services group to "hold" from "buy",
citing limited commentary from management on the path to
recovery in mid-term margins and slowdown in near-term M&A
activity
    ** The broker says the recent 2023 outlook cut was a 
surprise, given that the guidance had only been provided
alongside Q3 results, showing a deterioration in near-term
fundamentals
    **  "The FY22 margin guidance was also cut despite higher
revenues, which in our view implies continued challenges in the
underlying business," the broker says, pointing to activity and
productivity still not at pre-pandemic levels and a timing lag
between price increases and inflation
    ** It notes that the company has delayed some of its bolt-on
activity and cut M&A spend outlook with the view that market
pricing will adjust in a new higher interest rate environment
    ** Jefferies cuts its forecast for adj. EBITDA by about
15-30% for 2023-2026, while its revised 2023 margin estimate
sits at lower end of the he company's revised margin guidance of
16-18%
    ** Stock at bottom of German small-cap index  .SDAXI 
 (Reporting by Linda Pasquini)
 ((Linda.pasquini@thomsonreuters.com))