Indra Sistemas: Q1 15 results way below expectations, FY15 margin target reduced, no dividendSELL, Fair Value EUR9.2 vs. EUR8.9 (-12%)
We reiterate our Sell rating and adjust our DCF-derived fair value to EUR9.2 from EUR8.9 on lower adj. EPS ests. (-44% for 2015, -9% for 2016, -5% for 2017 = -EUR0.6/share) and better assumptions on medium-term lfl sales growth (+5% vs. +3% = +EUR0.5) and WCR (12% of sales vs. 15% = +EUR0.4). Yesterday evening Indra reported Q1 15 results way below expectations due to tough comps on election projects and overruns in Brazil/Lithuania, which will be a drag on FY15 results. While the company decided to suspend its dividend, we see a negative short-term share price reaction.
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