(BFM Bourse) – The research office moved to “outperformance”, equivalent to purchase, on the stock this Monday against “neutral” previously. Oddo BHF underlines that the company’s activity is driven both in the third quarter by the Rugby World Cup and by reservations linked to the 2024 Olympics. As for China, even if the recovery takes time to take hold. materialize, it remains a potential catalyst for the title next year.
JCDecaux remains one of the actions that has not transformed the test this year. The stock has fallen by 0.5% since the start of the year, due in particular to China, one of the group’s key countries, which disappointed, with an economic recovery that did not live up to expectations. hopes placed at the start of the year.
The fact remains that the group’s valuation remains cheap and does not necessarily reflect the company’s business prospects.
Thus, Oddo BHF and its analyst Jérôme Bodin (who recently obtained first place in the ranking of the best French analysts from Institutional Invest, as reported L’Agefi) this Monday raised their advice on the value to “outperformance” (equivalent to purchase) against “neutral”, previously. The price target is adjusted to 22 euros from 21 euros, which gives the stock a potential of around 25%.
This increase in recommendation allows the JCDecaux share to prance at the top of the SBF 120, with an increase of 7.8% to 17.42 euros around 10:50 a.m.
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France well oriented
Oddo BHF organized a roadshow (an investor conference to simplify) with the group’s management, whose message it considers “encouraging”.
If China (currently around 12% of turnover according to Oddo BHF but 19% in 2019) and Germany (around 7%) remain behind the group’s other countries in the third quarter, the dynamic is positive in the other regions, notably in France (18%), notes the design office.
“For the latter country, the Rugby World Cup and the prospect of the 2024 Olympic Games (Olympics) support activity in the third quarter,” he considers.
As the design office points out, in certain markets such as France, customers have an option on N+1 volumes. “In other words, by reserving a space in August 2023, they have the certainty of having a right to the same space in August 2024 and therefore during the Olympics,” explains Oddo BHF.
“We estimate that the third quarter should be particularly good”, in France “allowing leverage on the cost base given the importance of street furniture (two-thirds of local turnover)”, develops the financial intermediary who would not be “surprised” if organic growth exceeded 10% in the third quarter in this country.
The research office has also raised its growth forecast on a comparable basis for the third quarter, now counting on 8.5% compared to 7% previously. JCDecaux, for its part, indicated in July that it was targeting a like-for-like increase of 7% in its adjusted turnover.
Beyond the third quarter, Oddo BHF retained a contribution from the 2024 Olympics of 4 percentage points of additional revenue in France over the entire 2024 financial year, or 25 million euros.
China, a potential catalyst
As for China, which constituted one of the major points if not the main point of attention of the market on value, Oddo BHF underlines that the activity remains “sluggish”, with a level of activity still far from that of 2019. According to calculations by the research office, a return of activity to this 2019 level could theoretically add 80 million Ebitda (gross operating income).
“This point is important because the situation could improve in 2024 or 2025 under the effect of a possible Chinese recovery plan. As an advertising value, and assuming that consumption is sustained, JCDecaux would naturally benefit from it” , develops Oddo BHF. China could thus constitute an additional catalyst for action in 2024, even if the research office has not yet included it in its estimates.
With all these elements, and a drop in the price of around 25% since a peak reached on March 8, Oddo BHF considers that the elements are in place to position itself on the stock. “In view of the potential for a good surprise on Ebitda and the potential upside (rising potential, editor’s note) on China, the current price seems to us to be an opportunity,” writes the research office.
Oddo BHF’s recommendation increase echoes that of Deutsche Bank a few weeks ago. The German bank had also made the purchase. “In our view, the opportunity to buy JCDecaux stock, a high-quality name in the media, comes when cyclical concerns build up. And we believe that time has now arrived, as the stock underperforms. has outperformed the market by 25% since March,” estimated the German bank. She also cited the 2024 Olympics as a catalyst for next year.
Julien Marion – ©2023 BFM Bourse
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