Elior: stock up; Credit Suisse upgrades to 'buy'
(CercleFinance.com) - The Elior share is bubbling this morning, up 6% in Paris after the broker Credit Suisse upgraded its Neutral rating to Buy ("outperform"), while raising its target price from 13.
8 euros to 18.4 euros, giving the share upside potential of over 20%.
After three profit warnings, the consensus for Elior's 2018 EPS has tumbled 33% in six months, with the stock having fallen by 45% since its peak in 2017, the broker points out in its report. The market is now integrating margins that are at historic lows, with the stock's P/E having fallen by between five and six points. According to Credit Suisse, this represents a great buy opportunity.
Indeed, and still according to the note, the collective catering group, which is now led by a new management team, is not short of levers: its margins are now set to recover, its capital allocation is more disciplined, potential M&A in concessions and - why not - an LBO?
"Further we would note Elior was taken private back in 2006 by founder Robert Zolade together with Charterhouse and Chequers, when the market cap was c. E1.7bn following a period of disappointing share price performance," the report says. However, the broker admits that it has no information about this and does not consider this as a central argument.
Copyright (c) 2018 CercleFinance.com. All rights reserved.
The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.
8 euros to 18.4 euros, giving the share upside potential of over 20%.
After three profit warnings, the consensus for Elior's 2018 EPS has tumbled 33% in six months, with the stock having fallen by 45% since its peak in 2017, the broker points out in its report. The market is now integrating margins that are at historic lows, with the stock's P/E having fallen by between five and six points. According to Credit Suisse, this represents a great buy opportunity.
Indeed, and still according to the note, the collective catering group, which is now led by a new management team, is not short of levers: its margins are now set to recover, its capital allocation is more disciplined, potential M&A in concessions and - why not - an LBO?
"Further we would note Elior was taken private back in 2006 by founder Robert Zolade together with Charterhouse and Chequers, when the market cap was c. E1.7bn following a period of disappointing share price performance," the report says. However, the broker admits that it has no information about this and does not consider this as a central argument.
Copyright (c) 2018 CercleFinance.com. All rights reserved.
The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.