Vallourec SA (VK: FP) (OTC: VLOWY), a manufacturer specializing in tubular solutions, was downgraded from Buy to Hold by Kepler Cheuvreux, with a reduced price target to €15.00 from the previous €19.00.
The revision was prompted by the anticipation of decreased volumes and pricing for Vallourec, particularly in the North American market, as a result of lower oil price assumptions.
The analyst from Kepler Cheuvreux noted that while Vallourec's international activities, especially those related to gas, are expected to remain robust, they will likely not compensate for the diminished activity in the United States.
This shift is projected to lead to a decrease in EBITDA over the forecast period extending into 2025. Despite these challenges, Vallourec is anticipated to emerge as a stronger entity, continuing to generate positive free cash flow (FCF) and maintain its shareholder returns.
Vallourec's presence in North America has been a key factor in its performance, and the anticipated reduction in activity in this region is a significant development. The company's ability to adapt to these market changes while still delivering positive financial outcomes is a point of focus for investors and market watchers.
Kepler Cheuvreux's revised price target of €15.00, down from €19.00, and the change in stock rating to Hold from Buy, are indicative of a more cautious stance on Vallourec's stock, aligning with the firm's latest analysis and market expectations.
The firm has adjusted its model and valuation for Vallourec accordingly, taking into account the projected impact on the company's earnings before interest, taxes, depreciation, and amortization.
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