On Wednesday, BofA Securities adjusted its stance on AutoStore Holdings Ltd (AUTO:NO) stock, shifting the rating from Buy to Neutral. The firm also revised its price target for the company's shares to NOK11.00, a decrease from the previous target of NOK19.00.
The downgrade followed AutoStore's 2024 Capital Markets Day, where management maintained a positive outlook on the company's mid-term market opportunities.
However, they acknowledged current market weaknesses impacting the business in the near term. Revenue projections for the third quarter and the full year of 2024 fell short of market expectations by approximately 11% and 5%, respectively.
Despite a robust project pipeline, BofA Securities expressed caution regarding the delivery of AutoStore's backlog, extending this caution into 2025. The firm noted that extended decision-making cycles among customers are delaying order intake and backlog fulfillment, a trend that may persist into the following year.
In light of these factors, BofA Securities has reduced its revenue and adjusted EBIT estimates for AutoStore for 2025 and 2026 by roughly 10-15%. The new estimates sit approximately 5% below the consensus for the company's adjusted EBIT in 2025.
The valuation of AutoStore by BofA Securities now incorporates a 25% discount to the multiples of quality industrial peers, which is an increase from the previous discount of 20%. This new valuation is based on 19 times the estimated 2025 enterprise value to EBITA of AutoStore's industrial peers. BofA Securities justified this discount by pointing out AutoStore's high-margin business model, which is currently facing limited visibility in revenue in the near-term.
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