Stifel sees digitization trends limiting slowdown risks for software, payment & IT services
11/07/2022 12:16
** Stifel sees solid Q2 results and broadly unchanged
full-year targets for the software, payment & IT services
sector, citing well established trends including cloud adoption
and e-commerce limiting downside in case of potential economic
slowdown
** "Capital market concerns are yet to trickle into the real
world...and we expect 2Q22 earnings to remain solid overall,"
the broker says, adding it expects companies to keep their FY
targets largely unchanged
** It sees resilient trends for the sector including
digitization and cloud adoption for Capgemini CAPP.PA , Reply
REY.MI , Dassault DAST.PA , SAP SAPG.DE , as well as
e-commerce and non-cash payments penetration for Adyen
ADYEN.AS , Nexi NEXII.MI and Worldline WLN.PA (all rated
"buy")
** "Elsewhere, we expect investors will increasingly focus
on the top-line resilience and recurring revenues," - Stifel
** The broker however cuts France's Atos ATOS.PA to "sell"
from "hold", citing risks to its restructuring
** ** Atos in June announced a plan to split its activities
and sell assets, prompting the departures of its CFO and CEO
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** "Given the planned restructuring, working capital
increases, and cash outflow from already announced M&A, we
forecast Atos will see sustained significant negative FCF in
FY22/FY23," - Stifel
** It adds Atos' planned transformation of its TFCo (legacy
business) should be "long and arduous", flagging scale of
transformation, liquidity risk, delays and departure of top
management
** Atos shares are down around 3%
(Reporting by Olivier Sorgho)
((Olivier.sorgho@thomsonreuters.com))