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.
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.
