Worldline stock slumps again

Worldline's stock plummeted 15% on Monday, adding to its recent slide following last week's downgrade in guidance and increasing concerns over structural issues.

The company revised its full-year 2024 guidance downward, citing weak trading conditions, particularly in its Australian business and some online verticals such as travel and hospitality.

Following the news, HSBC cut its earnings per share (EPS) estimates for 2024-2026 by 4-7%, as well as its free cash flow (FCF) estimates by 12-15%, with the bank's analysts pointing out that the issues Worldline is facing seem more "structural than cyclical."

HSBC highlighted that Worldline now expects just 1% revenue growth, down from the 2-3% previously forecast, and EBITDA of €1.1 billion, lower than the earlier range of €1.13-1.17 billion. The FCF projection has also been reduced from €230 million to €200 million.

One of the key concerns HSBC has for the company is the ongoing struggle to integrate acquisitions, which was a core part of the company's growth strategy.

The bank's note mentioned, "The underperformance recorded by the group, due last June to an abrupt slowdown in Germany (BS Payone, was bought by Ingenico), and now in Australia (ANZ partnership) raises some questions about the integration of perimeter in the information system of the company."

Moreover, the departure of CEO Gilles Grapinet did little to boost confidence.

"Nothing will change before a new CEO with fresh views arrives," HSBC wrote, warning that the process could be lengthy and costly, potentially leading to further restructuring and provisions on existing contracts.

HSBC maintained its Hold rating and lowered its price target for the stock from €10 to €8, citing "uncertainties over a rebound in 2025" and persistent headwinds for the company's revenue growth and margins.