MS names European business services top picks into end-2024

Azelis NV

09/09/2024 09:14

** Morgan Stanley reiterates its preference for business services providers among European equities thanks to their high inverse correlations to bond yields, and names its "overweight" picks for the sector
** The broker turns more constructive on speciality chemicals distribution, upgrading Azelis  AZE.BR  to "overweight" and IMCD  IMCD.AS  to "equal-weight", citing expected increase in demand and return of volume growth
** It remains positive on testing firms, with Bureau Veritas  BVI.PA  ("overweight") as the top choice "with peer-group leading organic growth and guidance"; it says the French group could deliver another beat and raise in Q3
** Within the Quality sub-sector, MS prefers Experian  EXPN.L  and Diploma  DPLM.L  (both "overweight") on their sector-leading organic growth, margins and returns
** Elis  ELIS.PA  and SPIE  SPIE.PA  (both "overweight") are its "growth at a reasonable price" plays
    ** In staffing, Hays  HAYS.L  and PageGroup  PAGE.L  (both "equal-weight") look expensive but investors are ready to look through the short-term pressure, it says
     
    RATING & PT CHANGES
  
 COMPANY     RATING       OLD RATING   PT         OLD PT
 Azelis      Overweight   Equal-weigh  EUR 22.30  -
                          t                       
 IMCD        Equal-weigh  Underweight  EUR 141    -
             t                                    
 Ashtead     Overweight   -            GBp 7,000  GBp 6,400
 Ferguson    Equal-weigh  -            GBp        GBp
             t                         14,800     13,650
 Travis      Equal-weigh  -            GBp 970    GBp 890
 Perkins     t                                    
 
(Reporting by Mathias de Rozario)
((mathias.derozario@tr.com))