Varta stock (ETR:VAR1) is one of the biggest losers on Thursday as price is down more than 10%. As in the middle of the week, many investors sold the share on Thursday. A disappointing outlook provided additional sales arguments. Mainly good business figures and the promised first-time dividend payment could do little, however.
In the early afternoon, the shares lost almost 13% to 134.80 euros, which is the second weakest daily performance in the MDax – only the fertilizer company K + S was even weaker in the index of medium-sized companies in view of a balance sheet review by the Federal Financial Supervisory Authority (Bafin).
On Tuesday, the Varta shares had climbed to 168.40 euros. At their record high of 181.30 euros at the end of January, they were able to show a proud plus of 53% for the still young year 2021 and thus the best development of all 60 MDax titles. The rally is also seen in the context of buy-in by investors who have been caught off guard betting on falling prices. This had triggered a real price explosion – but immediately afterwards it went steeply downhill.
Varta’s key data for the past year gave little cause for complaint: thanks to the boom in lithium-ion button cells for wireless headphones, the company had increased sales by almost half if the takeover of the household battery division is factored out. With earnings before interest, taxes, depreciation and amortization adjusted for special effects, there was even an increase of 145 percent. Both indicators were above the latest planning as well as the analyst estimates.
Analyst Florian Pfeilschifter from Stifel Europe, like his Commerzbank colleague Florian Treisch, found the proverbial fly in the soup in the weak Microbatteries & Solutions segment. In addition, the outlook for 2021 was unanimously described by analysts as a disappointment. Above all, the prospect of sales growth of around eight percent to 940 million euros is “even weaker than expected,” said Treisch. Both his and the consensus forecast had been over a billion euros, and the company had previously promised “just under a billion euros”.
The fact that Varta wants to pay a dividend for the first time since going public did not inspire Treisch either. The planned profit distribution of EUR2.50 per share, which corresponds to a total of around 100 million euros, is of no consequence for his assessment of the share, emphasized the expert. Because he was the only analyst who had previously expected a dividend. A trader even questioned the usefulness of the profit distribution, since the share is a growth stock and the company has to cope with high investments