RBC cuts testing groups SGS, Bureau Veritas on weak global trade outlook

Bureau Veritas SA

01/12/2025 09:48

** RBC Capital Markets downgrades testing groups SGS SGSN.S and Bureau Veritas BVI.PA to "underperform" from "sector perform", citing a weaker trade outlook

** The brokerage says the testing, inspection, and certification sector is linked to global trade, for which the WTO has lowered its forecasts

** A weakening sustainability impetus is also a concern, RBC says

** The broker adds that the growth rate of the business has been underwhelming for SGS over time and that the strength of the Swiss franc reduces earnings

** Furthermore, RBC says Bureau Veritas' organic growth has lagged peers and warns that pursuing larger deals could dilute its return on investment capital

** Looking at the sector's names, RBC sees "a swathe of better opportunities across (it)" than the aforementioned companies

** Switzerland's SGS shares slip 3% to the bottom of Swiss mid-cap index .SMIM, while those in France's Bureau Veritas fall 2.6%, tracking their worst day since early July if losses persist

(Reporting by Simon Ferdinand Eibach and Lucie Barbier)

((Simonferdinand.eibach@thomsonreuters.com))