(Boursier.com) — Vivendi stumbles 4.4% to 7.8 euros this weekend. Despite online revenues, even slightly higher than analysts’ expectations in the third quarter, the market is focusing on the Canal+ ‘disappointment’. The entertainment group unveiled a turnover of 2.578 billion euros, up 4.1% over one year (+0.6% at constant exchange rates and scope). Canal+ nevertheless saw its revenues fall by 3.3%, to 1.42 billion euros.
Revenue came in above consensus estimates, but Canal+ is ‘weak’ in the mix, Deutsche Bank says. A disappointment linked in part to the late releases of Studiocanal films, according to the company, which also wanted to reassure about the growth of its subscriber base in France. Furthermore, the strength of Havas and Gameloft contributed to boosting overall sales above market expectations.
Morgan Stanley (‘overweight’) retains that the group exceeded the consensus in the third quarter. He also notes that management expressed confidence that Canal+ can mitigate any impact on profitability of the proposed VAT change in France. Finally, the valuation looks “unsustainably low” with shares trading at a 47% discount to the broker’s sum of parts, using UMG’s current price.
Oddo BHF speaks of turnover exceeding expectations in absolute terms, but with a rather disappointing performance from Havas. Its expectations are generally unchanged but revised slightly lower at Canal+ Group. The broker remains to ‘outperform’ on the value while the discount is currently very significant (around 50%) on the basis of its valuation without holding company discount. He remains convinced that Vivendi should be the subject of a simplification operation in the coming months, possibly an offer from Bolloré on the group. This could go through a cash or mixed offer with a securities component. It therefore still seems likely that the two structures will be linked much more quickly… The group has moreover confirmed that it will cancel its treasury shares after 24 months, which should mechanically lead Bolloré to cross the threshold of 30% (around September 2023 maximum) and launch an offer. An upstream operation seems most likely. In this perspective, Vivendi remains an attractive security to take advantage of this speculative dimension. This even if in the short term, it declines with the market and is only partially supported by smaller share buybacks by the group.
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