GEA's Share Price Overreacts to 2016 Profit Warning; We Are Maintaining Our EUR 44 FVE
We think GEA’s negative share price reaction to the company’s guidance downgrade for 2016 is overstated, as we believe the issues driving the revision are temporary. We are maintaining our wide moat rating and EUR 44 per share fair value estimate, and following the dramatic pullback, we now consider GEA shares to be moderately undervalued. The company lowered 2016 revenue guidance to a “moderate decline†from a “moderate increase†and operating EBITDA by 13%-22% (based on a previously given rang...GEA Group focuses on the development and production of process technology and components for production methods. Co. segments include: GEA Food Solutions, which manufactures machinery for preparing, marinating, processing, cutting, and packaging meat, poultry, and other foods; GEA Farm Technologies, which manufacturers product solutions for milk production and livestock farming; GEA Mechanical Equipment, which concentrates in separators, decanters, valves, pumps, and homogenizers; GEA Process Engineering, which designs and develops of process solutions for the pharmaceutical, and chemical industries; and GEA Refrigeration Technologies, which concentrates in refrigeration technology.
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