(new: closing prices, comment DZ Bank)
FRANKFURT (dpa-AFX) – Profitability concerns weighed heavily on the shares of the two MDAX-listed software groups TeamViewer and Software AG (Software) in the middle of the week. Software AG disappointed investors with the margin forecast. The US bank JPMorgen also lowered its investment rating for Teamviewer.
Teamviewer closed 5.5 percent lower at EUR 12.17, Software AG fared even worse with minus 14.7 percent at EUR 21.80. The stocks were the weakest in the mid-cap index, which ended trading slightly up. The share certificates of the software group SAP (SAP SE) were not impressed by the negative industry news in the moderately stronger Dax (DAX 40) and gained 0.8 percent.
Analyst Armin Kremser from DZ Bank believes the time has not yet come to invest in Software AG shares. Due to the fact that investors have repeatedly been disappointed over many years, a significant valuation discount compared to the peer group is justified. Kremser lowered the fair value for the title from 20 to 17 euros and stuck to his “sell” vote. The outlook for 2023 is a bitter disappointment.
Software AG’s forecasts for 2023 implied significantly lower market estimates for adjusted operating profit (EBITA), wrote JPMorgan analyst Toby Ogg. This is due to rising costs and strategic investments. The expert did not want to rule out that the news from Software AG could burden the industry throughout Europe and expressly mentioned the French company Dassault Systems (Dassault Systèmes), which was nevertheless not impressed by it on the Euronext with growth of 0.6 percent, as well as the German Teamviewer.
The latter also downgraded Ogg from “neutral” to “underweight” and lowered the price target from 12 to 11 euros. Increasing investments by the company, which specializes in remote computer and machine maintenance, threatened to reduce profitability, the analyst wrote in a study published on Wednesday. Market expectations for the current year are too optimistic. In addition, Ogg put the shares on a negative list in view of the company’s forthcoming business figures.
At Software AG, analyst Sven Merkt from the British investment bank Barclays described the operating profit outlook for 2023 as weak. In the middle of the range, this is 15 percent below the consensus estimates – despite a restructuring program that should bring savings of up to 35 million euros in 2023. Merkt maintained his underweight rating. “Not convincing,” a dealer also described the Darmstadt-based company’s outlook. Margin guidance should weigh significantly on earnings and free cash flow expectations.
The price losses on Wednesday caused Software AG’s shares to fall to their lowest level since early November. At the same time, they tore the chart-technically relevant 50- and 100-day line for the medium-term trend. Teamviewer marked the lowest price since the end of November and also slipped below the 50-day line./ajx/mis/zb
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