On Wednesday, Kepler Cheuvreux analyst Peter Olofsen downgraded Alfen (ALFEN:NA) (OTC:ALFNF) stock from ’Hold’ to ’Reduce’, significantly lowering the price target from EUR13.00 to EUR9.00. Olofsen revised his expectations for the company’s financial performance, reducing the EBITDA forecasts for the years 2025-2027 by 14-20%. Additionally, the adjusted earnings per share (EPS) estimates were cut by a steep 30-54%.
The downgrade was driven by a series of concerns highlighted by the analyst. Olofsen pointed out that the new EBITDA forecast suggests Alfen will barely maintain operational cash flow breakeven, excluding working capital fluctuations. This position leaves the company vulnerable to potential further earnings disappointments.
Alfen faces structural market share challenges, particularly in the electric vehicle (EV) charging sector. Olofsen noted a rigid cost base in the Smart Grid Solutions ( SGS (SIX:SGSN)) division, where there is a lack of commercial flexibility, which could limit the company’s ability to protect against downside risks. Although the Energy Storage segment is showing signs of growth, it is unlikely to compensate for the weaknesses observed in other areas of the business.
In setting the new price target, Kepler Cheuvreux applied an 11x enterprise value to EBIT (EV/EBIT) multiple on the company’s expected EBIT for 2026. This valuation represents a 20% discount compared to the average of Alfen’s peers. The revised target implies that there is an approximate 30% downside to the current stock price.
The analyst’s statement concluded with a cautionary tone, emphasizing the increased sensitivity of Alfen to earnings disappointments and the limited downside protection due to the challenges faced in its market segments.
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