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Thales: Oddo upgrades to 'buy'

(CercleFinance.com) - In a report issued on Tuesday morning, Oddo has upgraded its rating on the Thales stock from "neutral" to "buy," raising its target price from 99 euros to 107 euros.

The broker is of course reacting to the takeover of Gemalto, an operation which it believes greatly enhances Thales' growth profile - which is taking a clear turn towards digital security - without drastically changing its valuation multiples. It is therefore looking for 2017/2020 EPS CAGR at the NewCo of 17.6%, against 10.9% for Thales alone.

Oddo also incorporates pre-tax cost synergies (purchases, SG&A, R&D, etc.) of 40 million euros in 2019 and 80 million euros in 2020, i.e. 2.5% of the target's turnover over this time span. Furthermore, the broker emphasizes that "this growth does not take into account income synergies, which offer additional potential.

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