(BFM Bourse) – The German bank confirmed its purchase advice on the outsourced customer relations group this Friday and raised its target. She cites three reasons to bet on action, believing in particular that the consensus is too pessimistic.
Teleperformance is at the top of the CAC 40 this Friday. The outsourced customer relations specialist is at the top of the Parisian index, gaining 4% at the end of the session.
The stock is supported by Berenberg who reiterated his buy advice while raising his price target to 215 euros compared to 210 euros previously.
Teleperformance’s valuation has suffered in recent quarters, as the market fears that generative artificial intelligence (AI) will disrupt its economic model. The stock also suffered from several disappointing publications in terms of growth.
The group, however, started the year better than analysts expected, with positive growth in the first quarter when the consensus expected a decline in its revenues. The stock jumped more than 13% during the session following the publication, which illustrated the company’s undervaluation.
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Growth that will accelerate over the year
For Berenberg, market fears about AI are exaggerated. “We believe the company is misunderstood by many investors who we believe have associated the emergence of generative artificial intelligence (AI) with slow growth in the customer relationship outsourcing market throughout the “year 2023, which, in our opinion, was rather caused by cyclical factors”, explains the German bank.
The establishment cites three reasons to position itself on the stock for the rest of 2024. First of all, the consensus is too pessimistic on growth, anticipating an increase in its revenues of 1.8% on a comparable basis, while Berenberg retains 3.1%.
Next, the bank believes that the group’s core business activities (customer relations, content moderation, digital marketing, etc.) will see their momentum accelerate during the year, after experiencing a modest decline in the first quarter ( -0.9% on a comparable basis). Berenberg expects “low single digit” growth, between 1% and 4%, over the rest of 2024. An increase which could be enough to allay fears about AI. “The core business is the segment most at risk when considering AI and we believe this level of growth would refute much of the near-term downside scenario driven by AI,” explains the establishment.
“Third, we estimate that the fourth quarter pro forma organic growth rate will reach 5%, which is a good thing and a sign of what normalized growth could look like through 2025,” Berenberg continues.
Berenberg also calculates, based on the group’s annual outlook, that Teleperformance could return more than 580 million cash to its shareholders in the form of dividends or share buybacks, i.e. a return of more than 9%.
Julien Marion – ©2024 BFM Bourse
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