JPM says Elior's valuation 'not appealing enough', cuts TP

Elior SA

21/06/2023 10:49

** J.P.Morgan cuts French catering group Elior's  ELIOR.PA 
target price and keeps its "underweight" rating, saying the
valuation is "not appealing enough" following the tie-up with
Derichebourg's  DBG.PA  DMS
    ** The broker cites limited evidence and visibility around
the progress made on Elior's existing business, and flags lack
of margin recovery
    ** "Whilst the Derichebourg transaction should help Elior to
fix its balance sheet and perhaps improve its overall offering,
we do not believe the valuation is reflective of the risks, of
which rather ambitious synergy targets at this stage," JPM says
    ** Given the dilution from the all-stock transaction and
slower than expected margin recovery, the broker cuts its EPS
estimates from FY 2023 onwards
    ** JPM lowers its target price to EUR 2.5 from EUR 2.8
    ** Elior last month cut its margin forecast
    ** The stock is down 2.8%, among the worst performers of
France's SBF 120 index  .SBF120 

 (Reporting by Federica Mileo in Gdansk)
 ((Federica.mileo@thomsonreuters.com))