STOCKS NEWS EUROPE-Edenred drops after downbeat analyst notes

Shares in voucher specialist Edenred (Paris: FR0010908533 - news) drop 5 percent as traders cite downbeat notes from UBS (Xetra: UB0BL6 - news) and Natixis (Paris: FR0000120685 - news) following the company's recent warning that exchange rate changes in Venezuela could eat into full-year operating profit.

UBS analysts trim their share price target to 23.55 euros from 24 euros after cutting their earnings forecast. On top of Venezuela's change in exchange rate, the analysts also cite the impact from the currency weakness in other Latin American countries such as Brazil and Mexico.

"We have seen the Brazilian Real fall by about 16 percent in the fourth quarter versus the same quarter in 2012... Furthermore, the Mexican Peso has weakened by about 5 percent on average over Q4 2013 versus Q4 2012," they write in a note.

Natixis analysts downgrade their rating on Edenred stock to 'neutral' from 'buy' and cut their target to 26 euros from 27 euros.

"Based on our updated model, we have substantially cut our earnings-per-share (EPS) estimates," the analysts write in a note.

"It is true that Edenred continues to offer considerable EPS growth in 2014 versus 2013, but we now see the currency risk and demanding comparison in H1 limiting upside in the short term. The fact that the valuation is already high is likely to hold back the stock for the time being."

Edenred trades at 24.4 times earnings expected in the next 12 months, while rival Sodexo (Frankfurt: SJ7.F - news) trades at 19.8 times, according to Thomson Reuters (Frankfurt: TOC.F - news) data.

Reuters Messaging: blaise.robinson.thomsonreuters.com@reuters.net