OVH Groupe S.A. (EPA:OVH): Are Analysts Optimistic?

We feel now is a pretty good time to analyse OVH Groupe S.A.'s (EPA:OVH) business as it appears the company may be on the cusp of a considerable accomplishment. OVH Groupe S.A. provides public and private cloud, shared hosting, and dedicated server products and solutions worldwide. The €1.8b market-cap company announced a latest loss of €40m on 31 August 2023 for its most recent financial year result. Many investors are wondering about the rate at which OVH Groupe will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for OVH Groupe

OVH Groupe is bordering on breakeven, according to the 10 French IT analysts. They expect the company to post a final loss in 2025, before turning a profit of €17m in 2026. The company is therefore projected to breakeven around 2 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 95%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for OVH Groupe given that this is a high-level summary, though, take into account that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. OVH Groupe currently has a debt-to-equity ratio of 160%. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on OVH Groupe, so if you are interested in understanding the company at a deeper level, take a look at OVH Groupe's company page on Simply Wall St. We've also compiled a list of key aspects you should further examine:

1. Valuation: What is OVH Groupe worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether OVH Groupe is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on OVH Groupe’s board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.