Stifel has downgraded its recommendation on Elior from 'hold' to 'sell', with a price target lowered from 3.3 to 1.9 euros, following last week's quarterly trading update accompanied by an earnings warning.

The broker points out that the catering and services group 'has lowered its margin forecast for the second time this year, this time citing higher-than-expected launch costs for new contracts'.

As a result, Stifel has reduced its EBITA estimates by 40% for this year, and by around 25% for subsequent years, and 'does not see a return to positive FCF generation before 2025, reflecting a combination of inflation and structural weaknesses'.

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