(BFM Bourse) – Deutsche Bank Research analyst Gianmarco Conti lowered his opinion on Thursday to “hold” from “buy” previously on the stock, considering that the group’s prospects for 2024 as well as the medium term are “at risk”.
Dassault Systèmes is having a difficult year. With a drop of 21.4% since January 1, the stock of the specialist in computer-aided design and manufacturing software is showing the third biggest decline in the CAC 40 over the period.
This is due to disappointing activity in “life sciences”, a sector in which the group has developed in recent years, notably via the acquisition in 2019 of Medidata, specializing in medical software which makes it possible, for example, to monitor clinical tests. The weakness of this division was the cause of market disappointment in the company’s last two publications.
After this difficult journey, Deutsche Bank Research analyst Gianmarco Conti decided to lower his advice to “hold” from “buy” this Thursday. This weighs a little on Dassault Systèmes shares, which dropped 2% around 4:30 p.m., the third biggest drop in the CAC 40.
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“At risk” prospects
Based on discussions with industry experts, research into clinical trials and interviews with company management, the analyst believes a rebound appears likely in life sciences.
However, Gianmarco Conti also believes that both the group’s objectives for 2024 and the medium term are “at risk”.
The analyst expects a decline in life sciences of 1% to 2% in the second quarter. This will cause Dassault Systèmes’ total revenue to disappoint consensus expectations. Then, in the third quarter, the group will be penalized by a high comparison base, due to revenues derived last year from a major contract with the manufacturer Jaguar Land Rover, which Gianmarco estimates between 50 million and 70 million euros. .
With other assumptions, including growth of between 4% and 6% in life sciences in the last quarter of 2024, the analyst estimates that Dassault Systèmes should reach the bottom of its revenue forecast range for the whole of 2024 (6.35 billion to 6.425 billion euros), while the consensus is at the upper end.
Regarding its medium-term objectives, Dassault Systèmes indicated last year that it was targeting revenues of 9.5 billion euros in 2028 (compared to a base of 6 billion expected in 2023) with additional revenues of 1 billion euros. euros in life sciences.
Gianmarco Conti has done his calculations here again. Assuming that Dassault’s other segments grow by an average of 9% per year excluding exchange rate effects, the analyst calculates that life sciences will have to show “mid high teens” growth (more than 15%) each year, between 2025 and 2028, and even 18% over the last three years, to meet the group’s objectives. Which seems too ambitious to him, and means that the medium-term objectives risk being overhauled.
Julien Marion – ©2024 BFM Bourse
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