Canal+ shares saw a significant drop after UBS Group AG announced that the stock is fairly valued, which stands in contrast to the optimistic predictions from many analysts following the French media company’s recent debut in London this week.

The stock plummeted by nearly 19%, hitting 191.10 pence, as UBS analysts, including Ben Shelley, began coverage with a neutral stance and established a price target of 240 pence.

UBS highlighted Canal+’s ongoing acquisition of MultiChoice, noting the challenges posed by declining profits in South Africa and rising losses in free cash flow due to currency volatility.

“The risk of value erosion resulting from the MultiChoice deal leads us to take a more cautious view on the equity story,” Shelley remarked.

In contrast, CIC Market Solutions reported on Thursday that they expect shares to climb to 450 pence, contending that the market has already factored in the risks linked to MultiChoice.

Canal+ represented the largest of three entities spun off from its parent, Vivendi SE. Its listing on the London Stock Exchange was seen as a positive development, especially as many companies have been moving their primary listings to New York amidst capital outflows from UK equity funds.

Moreover, Vivendi recently separated its advertising branch, Havas NV, and publisher Louis Hachette Group for independent listings on Monday. However, after Thursday’s drop in Canal+ shares, the total market value of Vivendi and its three spinoffs was noted to be 10% lower than Vivendi’s standalone valuation as of December 13, according to Bloomberg’s calculations.

© 2024 Bloomberg

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