OVH Groupe SA (FR:OVH) or OVHcloud shares gained over 7% as the French cloud services company set favourable long-term targets, expressing confidence in the ongoing benefits of digital transformation. The company remains optimistic about its goals despite facing an uncertain environment in the cloud market.
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The shares have had a solid start in 2024, gaining almost 20% year-to-date after a nearly 40% fall in 2023.
OVH Groupe is a leading cloud computing company in Europe, providing a comprehensive range of services to around 1.6 million customers.
OVHcloud’s New Financial Targets
According to the new targets, OVHcloud aims to achieve a weighted average annual organic revenue growth (like-for-like CAGR)of 11% to 13% for Fiscal years 2024 to 2026. The adjusted EBITDA margin is expected to reach about 39% by FY26. The company aims to achieve positive free cash flow in FY26.
OVHcloud’s updated guidance acknowledges the temporary slowdown in cloud market growth. In recent times, the cloud market has witnessed a slowdown, with users optimizing their spending due to macro pressures. However, the company’s cloud solutions, serving a vast market, remain well-positioned for further growth in the medium and long term.
The company’s largest segment, Private Cloud, has an addressable market valued between €16 and €19 billion globally, with an anticipated growth rate of around 10% per annum for the 2023-2027 period. Private Cloud contributed to more than 60% of the company’s revenue in 2023.
OVH Share Price Prediction
As per the consensus rating on TipRanks, OVH stock received a Hold rating, supported by two Buys, three Holds, and one Sell recommendation. The OVHcloud share price prediction is €8.80, which is 13% below the current trading price.
