On European technology, Citi says 'keep calm and carry on'

Netcompany A/S

10/01/2022 08:27

** Citi Research sees secular fundamental appeal and
cyclical tailwinds for the European technology sector to
overcome "an unsupportive valuation backdrop"
    ** It raises Infineon  IFXGn.DE  and STMicroelectronics
 STM.BN  to "buy" from "neutral" on expected outperformance in
2022 and maintains ASML  ASML.AS  at "buy"
    ** "Multiple growth drivers point to a superior ~20% EPS
growth for the sector in 2022, compared to ~5% expected for the
wider EU market," Citi says in a note
    ** Primarily reflecting cloud transition profiles, it
prefers in software Capgemini  CAPP.PA , Sage  SGE.L  and
Netcompany  NETCG.CO , all at "buy"
    ** "We remain positive on IT services demand fundamentals
underpinned by digital transformation, although talent issues
need to be monitored," it also adds
    ** For EU payments, Citi picks from a risk-reward standpoint
self-help 'omnichannel' recovery plays like Worldline  WLN.PA ,
at "buy", and Nexi  NEXII.MI , at "neutral"
    ** It therefore cuts over 'online' story with excessive
growth expectations Wise  WISEa.L  to "sell" from "neutral" and
remains at "sell" for Adyen  ADYEN.AS  
    ** "The sector should also continue to benefit on account of
appealing cash credentials and the structural shift towards ESG
strategies," the brokerage notes

 (Reporting by Juliette Portala)
 ((juliette.portala@tr.com))