(Finance) – Alantra has reduced to 0.80 euros per share (from the previous 1.20 euros) the target price on Eurotecha company listed on Euronext STAR Milan that designs, develops and supplies Edge Computers and solutions for the Internet of Things (IoT), confirming the recommendation “Hold” on the stock given the potential upside of 10%.
Analysts write that Eurotech reported a “challenging” set of results for 3Q24, with revenue down 38% due to prolonged headwinds in key sectors, including industrial automation and automotive in Germany, as well as the destocking effect in Japan. The US market remains a weak pointhighlighting the need for restructuring efforts. Despite a weak revenue performance, the company demonstrated resilience through improved gross margins (56% on sales versus 49% in 3Q23), driven by a favorable product mix. EBITDA remained at breakeven, reflecting the success of its ongoing cost rationalization program, which targets savings of €4 million by fiscal 2025 on a run rate.
Alantra has reduced FY24-26 sales estimates by 16% on averagereflecting a weaker-than-expected market environment, particularly in the United States and the Embedded segment. It aligns GM expectations for 2024 with the midpoint of management’s guidance for fiscal 2024 (48-50%). It increased FY24 net debt by €1.2 million to €19.7 million. The new FY24 figures imply a 33% decline in 4Q revenue with adjusted EBITDA breaking even.
“A recently approved €20 million capital increase would position Eurotech to strengthen its operations in the United States via M&A, an imperative move in our view,” we read in the research, where it is underlined that “visibility on future business dynamics remains faded, with current indicators offering a limited support for a near-term trend reversal“.