Worldline leads SBF 120 losses as Goldman Sachs downgrades to Sell

Worldline is among the steepest decliners on the SBF 120 index Tuesday morning on the Paris Bourse, after Goldman Sachs downgraded its rating on the stock to "Sell." The investment bank believes the payments specialist will remain under pressure until it repairs its balance sheet and redirects cash flow toward growth rather than its restructuring program.

In a research note published yesterday evening, the U.S. investment bank announced it has downgraded its recommendation on the stock from "Neutral" to "Sell," slashing its price target from 0.40 to 0.23 euros.

Goldman Sachs argues that the company has become technologically vulnerable compared to industry frontrunners such as Adyen, Stripe, or Shopify, effectively placing it in a precarious position where it risks losing market share.

Despite transformation measures aimed at cutting costs and the fresh capital from its latest fundraising, the New York-based firm emphasizes that cash generation remains too weak to sustainably clean up the balance sheet and fund the efforts required to regain a leadership position.

Fundamentals and cash generation remain under pressure

"We forecast that Worldline will continue to post negative free cash flow in the near term, as any significant improvement in this metric is contingent upon both a recovery in revenue growth and the successful execution of the transformation plan," Goldman Sachs noted.

"While the successful 500 million euro capital increase and potential asset disposals have eased immediate liquidity concerns, we believe the company's balance sheet flexibility is likely to remain limited beyond the next 12 to 18 months," the bank warned.

Consequently, the financial institution advises investors to favor competitors, particularly Adyen, which it considers far better positioned.

As of 10:00 AM, Worldline shares had pared losses to trade down approximately 1% at 0.24 EUR, after opening with a 3.5% drop, while the SBF 120 was up 0.6%. The stock has lost more than 38% since the start of the year and is currently trading at all-time lows.

The group announced this morning that it has entered negotiations with Cuscal for the sale of its New Zealand operations at a price analysts described as "abnormally low," with an enterprise value of just 17 million euros. Above all, the transaction underscores fears of a very low valuation for its joint venture with ANZ, the Australian asset the group acquired in 2022 for 301 million euros.