On Friday, CFRA announced a downgrade of Umicore SA (UMI:BB) (OTC: OTC:UMICY) from Buy to Hold, alongside a significant reduction in the company's price target, now set at EUR23.00, a decrease from the previous EUR33.00. The revision comes in the wake of Umicore's underwhelming financial results for 2023 and subdued expectations for the coming year.
"We turn neutral on the weak 2023 results and PGM prices balanced by a more favorable capital raising environment thanks to the grant from the Canadian government," said CFRA.
The materials technology company reported a 7% decline in 2023 revenue, amounting to EUR3.9 billion. The adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) also fell by 16% to EUR972 million, resulting in an EBITDA margin of 25%, which is a drop from 27.3% in 2022. These figures did not meet the market consensus, which had anticipated an EBITDA of EUR989 million.
Looking ahead to 2024, Umicore has set its EBITDA forecast between EUR900 million to EUR950 million. This projection falls short of the market's expectation of approximately EUR980 million, suggesting a continuation of the downward trend. In response to these forecasts, CFRA has adjusted its 2024 earnings per share (EPS) estimate for Umicore to EUR1.70, a decrease from the prior EUR1.80 estimate. Additionally, CFRA introduced a 2025 EPS estimate of EUR1.75.
InvestingPro Insights
Amidst the challenges faced by Umicore SA, InvestingPro data provides a deeper look into the company's financial health and market position. With a market capitalization of $5.34 billion USD and a price-to-earnings (P/E) ratio of 10.15 based on the last twelve months as of Q2 2023, the company is trading at a valuation that reflects its recent performance.
The company's revenue for the last twelve months as of Q2 2023 stands at $24.63 billion USD, with a noted revenue decline of 7.03%. This contraction aligns with CFRA's concerns and the analysts' anticipation of a sales decline in the current year. Furthermore, Umicore's gross profit margin during the same period was 7.23%, which indicates weak gross profit margins as highlighted by one of the InvestingPro Tips.
InvestingPro Tips suggest that Umicore, a prominent player in the Chemicals industry, has been maintaining dividend payments for 26 consecutive years, which could be a point of interest for income-focused investors. Additionally, the stock generally trades with low price volatility, which may appeal to investors seeking stability in their portfolio.
For readers looking to explore more about Umicore SA's financials and market performance, there are additional InvestingPro Tips available at https://www.investing.com/pro/UMICY. Using the coupon code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, gaining access to a comprehensive suite of tools and insights to inform their investment decisions.
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