DE40: Evotec falls short of investor expectations; Kering shares tumble 🚨

• German DAX maintains part of morning gains
• Kering falls 8% after release of quarterly results
• Evotec presents unfulfilling forecasts for 2024

Overall market situation:

Wednesday's session on European markets started optimistically, but much of the morning's gains have now been erased. Better sentiment overall is being dragged by Wall Street, where yesterday we saw an upward session, and today it may be extended by a good reception of Tesla's results. 

On the Old Continent, investor attention today turns to luxury goods giant Kering and German company Evotec. 

European companies listed during Wednesday's trading session are currently posting gains. Much of the credit for this, however, goes to the US market. ADRs based on Wall Street companies are showing clear momentum, with Tesla at the center. Source: xStation 5

The German benchmark DE40 is up 0.10% in today's session. At the moment, it seems that the 50-day EMA (blue curve) is the most important short-term support point for this index. Local resistance remains the peak near 18,800 points. Source: xStation 5

News:

The topic of the day for today's session is Kering (KER.FR), whose shares are losing more than 8% during today's session following the release of very weak quarterly results and a warning, about weak earnings in the first half of 2024. 

The company's shares are currently trading at their lowest levels in six years. Much of this is due to worrisome forecasts of a nearly 40%-45% decline in operating profit in the first half of 2024. The uncertain tone has prompted analysts, to lower their recommendations for the company's shares. The company's leading brand, Gucci remains a great unknown all the time, and the announced attempts to revive the business, do not bear fruit. 

However, it is worth noting that the company's "bad" results were expected by the market. Just a few months ago, the company warned, of a decline in revenue in Q1 2024. The design transformation and new aesthetics of the Gucci brand may be slower than expected, and their real impact may not be seen until late 2024.

Selected company results for Q1:

• Comparable revenues -10%, estimates -10.2% (Bloomberg consensus)
• Gucci revenue on a comparable basis -18%, estimate -19.4%
• Yves Saint Laurent revenues on a comparable basis -6%, estimates -6.75%
• Bottega Veneta revenues on a comparable basis +2%, estimates -0.05%
• Other Houses revenue on a comparable basis -6%, estimates -4.23%
• Eyewear & Corporate revenues on a comparable basis +9%, estimates +18.1%

Revenues €4.50 billion, -11% y/y, estimates €4.47 billion

• Gucci revenues €2.08 billion, -21% y/y, estimates €2.05 billion
• Yves Saint Laurent revenue €740 million, -8.2% y/y, estimate €737.1 million
• Bottega Veneta revenue €388 million, -1.8% y/y, estimate €381.5 million
• Other Houses revenue 824 million euros, -7.4% y/y, estimate 834.4 million euros
• Eyewear and Corporate revenues €536 million, +24% y/y, estimated €517 million

Illustrated revenue dynamics across the company's brands. Source: Kering

Noteworthy comments from management:

• "Although we expected a difficult start to the year, weak market conditions, especially in China, and the strategic repositioning of some of our houses, starting with Gucci, exacerbated the downward pressure on our expectations." - said CEO François-Henri Pinault
• In the first quarter, Gucci's revenues were particularly affected by the sharp decline in demand in the Asia-Pacific region.
• Implemented investment strategies will affect the company's operating profit this year (may be lower in terms of 2023)

In Germany alone, investors' attention has been drawn to Evotec (EVT.DE), whose shares are down 35% after presenting weak forecasts for 2024. Evotec is targeting double-digit revenue growth versus +18% expected, and double-digit growth for adjusted EBITDA versus +140% expected by consensus.