(CercleFinance.com) – RBC announced on Thursday that it had reduced its price target on Teleperformance from 210 to 125 euros in order to take into account the high risk profile of the stock.
In a note released early this morning, the Canadian broker explains that the perception of risk associated with the customer experience outsourcing specialist today makes it a ‘forbidden zone’ for many investors.
In his view, however, the market is ignoring the prospect of a free cash flow (FCF) yield expected to reach 17% this year, a level likely to attract the most opportunistic investors.
According to him, the stock market valuation has also become ‘too cheap to ignore’.
‘While it is true that it is difficult to identify possible catalysts in the short term (…), we believe that the simple fact of stopping disappointing investors would constitute sufficient reason for a stock market revaluation’, he concludes.
Although it maintains its ‘outperformance’ opinion on the stock, the broker now attaches a ‘speculative’ level of risk.
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