Canal+ shares took a notable plunge after UBS Group AG announced that the stock is fairly valued, a perspective that diverges from the optimistic predictions made by several analysts following the company’s launch in London earlier this week.
The stock price dropped as much as 19%, hitting 191.10 pence, as UBS analysts, led by Ben Shelley, commenced coverage with a neutral stance and established a price target of 240 pence.
UBS highlighted Canal+’s ongoing acquisition of MultiChoice, indicating that the company is grappling with declining profits in South Africa and rising free cash flow losses due to currency shifts.
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“The potential for value erosion stemming from the MultiChoice acquisition encourages us to take a more cautious view on the equity story,” Shelley remarked.
In a starkly different perspective, CIC Market Solutions reported on Thursday that it expects shares to reach 450 pence, contending that the market has already factored in the risks linked to MultiChoice.
Canal+ emerged as the largest of three entities spun off from its parent company, Vivendi SE. Its debut on the London Stock Exchange was seen as a favorable development for the exchange, which has been experiencing a trend of companies moving their primary listings to New York amidst significant outflows from UK equity funds.
Moreover, Vivendi also listed its advertising division Havas NV and publisher Louis Hachette Group separately on Monday. However, following Canal+’s decline on Thursday, the combined market value of Vivendi and its three spin-offs was reported to be 10% lower than Vivendi’s individual valuation on December 13, based on Bloomberg’s calculations.
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