Metro Shares Slide as Credit Suisse Says Sell: Frankfurt Mover
Metro AG (MEO) dropped the most in five weeks in Frankfurt trading after Credit Suisse Group AG analysts cut their recommendation on the stock, saying the 9.6 percent price gain this year belies the struggle Germany’s biggest retailer faces in reviving earnings.
Metro fell as much as 2.9 percent to 22.80 euros, the biggest intraday drop since Dec. 12. The shares traded down 1.9 percent as of 10:48 a.m. Credit Suisse analyst Xavier Le Mene cut the rating to underperform from neutral. Volume represented 46 percent of the three-month average after less than three hours of trading.
“We do not yet see broad and sustained self-help evidence,” Le Mene, who’s based in London, wrote in a research note today. “Nor do we expect the severe trading conditions in Metro’s European heartland to improve soon.”
It’s the first time Le Mene has placed an underperform recommendation on the stock, after rating Metro at neutral or outperform since at least 2006, data compiled by Bloomberg show. The stock was among the five biggest decliners in the Stock Europe 600 Index today.
Metro cut its forecast for 2012 earnings before interest, tax and special items to about 2 billion euros ($2.7 billion) in October because of the weakening economic climate in southern Europe and parts of eastern Europe. The Dusseldorf-based retailer reported little changed fourth-quarter revenue on Jan. 16 as increased sales at the Media-Saturn consumer electronics business in Germany offset weakness in the rest of western Europe.
“We expect ongoing price investment will be required both instore and online at Media-Saturn Germany,” Le Mene said, adding “similar investments” may also be required in western Europe.
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