(BFM Bourse) – The German bank went from “hold” to “buy” this Friday on the specialist in outdoor advertising displays, judging that the time has come to position itself on the title, at a time when macroeconomic fears are s accumulate. Because the group has structural assets and could, moreover, benefit from the Olympic Games in Paris, next year.
The disappointing recovery in China since the start of the year has not only weighed on luxury. JCDecaux, the specialist in outdoor advertising displays is suffering, with a share down nearly 5% since the start of the year, while the SBF 120 has taken 10.7% over the same period.
The group was notably weighed down by disappointing prospects, communicated in May, with a slow rise in international air traffic in China (and therefore traffic in the airports where the French company operates) and the loss of a contract in Canton.
JCDecaux does not disclose its exposure to China, but analysts estimate that the world’s second largest economy represents around 20% of its turnover. The company is notably present in the airports and metros of the country’s major cities.
But for Deutsche Bank the time has come to take advantage of the stock market air pocket experienced by the company controlled by the Decaux family. The German bank thus raised its recommendation on Friday on the action from “hold” to “buy”, with a target price of 21 euros.
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“A name of quality”
This supports the action of the French group which wins 3.6% at 16.88 euros around 10:45 a.m. and signs the largest increase in the SBF 120.
“In our view, the opportunity to buy JCDecaux stock, a high quality name in the media, comes when cyclical concerns mount. And we believe that time has now arrived, as the stock underperforms. performs the market by 25% since March”, estimates the establishment.
Certainly the exposure to China weighed on JCDecaux, but the bank considers that the risks associated with the deterioration of the Chinese economy are now well integrated into the share price. “And investors shouldn’t let short-term concerns overshadow the structural upside potential” of activity, she adds.
Deutsche Bank highlights the company’s long-term growth engines, namely digital with “Digital out-of-home” (DOOH), i.e. these advertising screens on terminals that can be found in the street, train stations or airports, but which can be updated in real time via the internet. JCDecaux sees this segment growing by 10% per year between now and 2025.
The Olympics as a catalyst next year?
These digital outdoor signage activities are closely associated with “programmatic”, which automates and optimizes digital signage sales transactions and campaigns using computer programs. According to eMarketer, “programmatic” is a global advertising market that is expected to grow from $147 billion in 2021 to $271 billion next year. This programmatic activity should even increase its appeal thanks to the development of “media planning” tools fueling artificial intelligence.
Thus, JCDecaux’s outdoor display offer “offers attractive long-term growth”, supported in particular by “the migration to digital” and purchases in “programmatic”, summarizes Deutsche Bank.
The bank also notes that the group has a solid balance sheet which will give it the means to carry out mergers and acquisitions and participate in the consolidation of its sector, which it considers an asset.
Last point: Deutsche Bank believes that the Paris 2024 Olympic Games should be a catalyst for action, allowing JCDecaux to generate additional income.
Julien Marion – ©2023 BFM Bourse
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