Goldman Sachs has downgraded Dassault Systemes SE (EPA: DSY) from Buy to Neutral, slashing its price target from €29 to €20 per share. The firm cited limited near-term visibility around revenue growth reacceleration, pointing to weaker-than-expected Industrial Innovation growth of just 1% YoY (excluding FX) and persistent challenges in European manufacturing and automotive sectors. Life Sciences also underperformed, with growth decelerating to negative 4% YoY due to volume weakness in contract research and a Moderna ramp-down. Goldman now forecasts 5% medium-term revenue growth (2026-2030), down from its prior 7% estimate and below Dassault's own 7-9% target. The downgrade follows consecutive years of missed growth expectations in 2024 and 2025. Dassault shares have fallen 60% over two years, trading near 15-year lows at 13x P/E and 14x EV/FCF. The firm maintains a realistic €3-5% FY2026 guidance but warns of execution risks.

Dassault's Industrial Innovation division saw its growth forecast cut to 6% in 2026 and 6% CAGR 2026-2030, while Life Sciences is expected to grow negative 2.3% in Q1 2026 and negative 2% for the full year, with mid-term growth at 1% CAGR. Operating cash flow conversion is projected to stabilize around 81% for FY2026. Since initiating coverage as a Buy in December 2019, the stock has underperformed the FTSE World Europe index by 34.4%, reflecting persistent investor skepticism despite the company's stable cash flow profile.

The downgrade underscores mounting pressure on Dassault's growth trajectory, particularly in its core industrial software and life sciences segments. Goldman's new 12-month target is based on 15x 2027-2028 EPS, reflecting a significant discount to the company's historical multiple. While the firm sees some near-term revenue growth potential, execution risks and challenging end-market dynamics remain paramount concerns for investors.