Carrefour Shares Decline After JPMorgan Places Stock on Negative Catalyst Watch

Leading investment bank JPMorgan has placed French retail giant Carrefour (EPA:CARR) on its "Negative Catalyst Watch" list, maintaining an "underweight" rating for the stock and cutting its price target from €10 to €9. This announcement led to Carrefour shares plummeting over 6% on the Paris stock exchange. The bank's decision is based on expectations that the company's first-half 2026 results, due on July 23, could be disappointing, along with a deteriorating earnings outlook.

JPMorgan analysts anticipate a double-digit year-on-year drop in Carrefour's first-half 2026 operating profit across its operations in France, Europe, and Latin America. The bank projects an 8% decline in group earnings before interest and taxes (EBIT) and an 11% fall in earnings per share (EPS) for the 2025-2027 period. Furthermore, the revised adjusted EPS estimate for 2025 has been lowered from €1.56 to €1.42, and for 2026, from €1.97 to €1.72. The surge in net financial expenses to €759 million in 2024 and an increase in the leverage ratio (net debt/EBITDA) to 2.2x in 2025 also contribute to the bank's concerns.

This development sharply contrasts with Carrefour's recent stock performance, which had seen a 15% increase year-to-date and a 30% rise over the past 12 months, before experiencing a significant downturn following JPMorgan's warning. Analysts note that the company has historically struggled to meet expectations in previous reporting periods, and current market expectations may not be realistic.

According to JPMorgan's assessment, the core business in France has not yet shown underlying improvement, and acquisitions like Cora and Match, while contributing to market share, continue to weigh on margins and profitability. Spain remains the only bright spot for the company, while weak volumes in Brazil and challenging conditions in other European markets like Poland and Belgium further dampen the overall outlook. Rising financing costs and currency-related pressures in Argentina are also adding to the company's financial burden.

Market analysts believe that Carrefour's upcoming first-half results will reshape market expectations. JPMorgan emphasizes that its own estimates are 5-7% below consensus for the full year, with a potential double-digit gap for the first half. This situation could intensify pressure on investors regarding the company's strategic initiatives and cost control measures. The company's ability to maintain profitability and manage its debt levels in the current market environment will be key indicators to watch in the coming quarters.