Bureau Veritas is Barclays' top pick in attractive testing sector

Bureau Veritas SA

24/01/2025 10:11

** Barclays is upbeat on the testing, inspection and
certification (TIC) sector where defensive growth, exposure to
appealing verticals and high dividend payouts weigh up against
China tariff risks and unpredictable "Trump 2.0 policies"
    ** Bureau Veritas  BVI.PA  ("overweight"), in merger talks
with SGS  SGSN.S  ("underweight") to create a $30 bln TIC giant,
remains the broker's top pick thanks to its "strongest momentum,
good balance sheet, cleanest story"
    ** It upgrades Intertek  ITRK.L  to "overweight" from
"underweight", saying China risks seem manageable for the
"undervalued" company with room for special dividends and share
buybacks 
    ** It cuts Eurofins  EUFI.PA  to "equal weight" from
"overweight" as it wants to see improved equity FCF to give
credibility to the group's medium- and long-term targets, while
short reports "will remain a question mark"
    ** SGS remains Barclays' least favoured stock, as its low
FCF generation hampers M&A while earnings growth will require
"execution and time"

 (Reporting by Jakob Van Calster)
 ((Jakob.vancalster@thomsonreuters.com))