Elior: Why the collective restoration specialist Elior is in free fall on the stock market

Elior loses more than 20% on Monday

(BFM Bourse) – The atmosphere is grinning for Elior. The collective restoration specialist fell sharply on the stock market, several financial intermediaries doubted the group’s ability to shine in an inflationary environment.

A group photo. Several local analysts are still not betting on Elior and they made it known on Monday. JPMorgan, Oddo BHF and especially Stifel show a cautious bias on the docket. Enough to fuel Elior’s downfall, which was already underway last week. After losing 15% last Wednesday and Thursday, the title of the collective restoration specialist continues to drop 22.6% to 2.08 euros, registering its greatest decrease after that of March 16, 2020 (-22.58% ) and the announcement of the first confinement measures in France.

The stock is heading not far from the new price target formulated by JPMorgan. The design bureau, which maintains its low-weight recommendation, is now targeting €2 on the title after €2.5 in a previous note. On the Oddo BHF side, it is an underperforming recommendation with a target lowered to €2.6 that is current. Analysts at Oddo BHF point to Elior’s difficulties in obtaining raw materials, but also in hiring when the summer returns.

A group “not out of danger yet”

For analysts at Stifel, Elior is simply “not out of the woods yet,” justifying their view of selling on the docket with a price target lowered to €2.20, from €2.80 previously. In the eyes of the design office, the inflationary environment, the labor shortage but also the related one-time costs on the arrival of the new CEOare all risks that will prevent Elior from meeting analyst consensus expectations.

Therefore, the panel’s analysts are far from convinced of the effects of the recovery plan initiated by Bernard Gault, who had taken over as interim CEO of the company (and has since become CEO of the group) after the departure by Philippe tricky word early March last.

The latest statement from the collective restoration specialist reports a better than expected activity, with a particular organic growth of 25% for its third quarter of its fiscal year 2021-2022. The group then explained that it had benefited from “more favorable sanitary conditions, but also from strong commercial development and an increase in the retention rate” of its clients. At the same time, Elior confirmed his goals for this financial year and his medium-term ambitions. An optimism that had then seduced investors, Elior had even closed the session on July 27 with a succulent gain of 31.35%.

Since then, investors are no longer convinced of Elior’s return to better fortune. The stock has lost more than two-thirds of its value since the start of the year. Elior’s valuation has been divided by seven since its (successful) return to the stock market at a price of 14.75 euros in June 2014.

Sabrina Sadgui – ©2022 BFM Bourse

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