MS more constructive on testers within business services names

Securitas AB

12/01/2024 12:58

** Within business services sector, Morgan Stanley is more
constructive on testing & inspection players, though says that
margin uplift will be largely dependent on a recovery in
consumer as well as volumes in China 
    ** The broker upgrades Bureau Veritas  BVI.PA  to
"overweight" from "equal-weight", naming the stock its new top
pick in the sector       
    ** It says Bureau Veritas has de-rated alongside peers, with
better organic growth offset by mix and FX driven margin
headwinds 
    ** MS also upgrades SGS  SGSN.S  to "equal-weight" from
"underweight", saying that though shares still aren't cheap, it
sees the downside has largely played out    
    ** Its other preferred stocks are "overweight"-rated Elis
 ELIS.PA , Experian  EXPN.L , and Diploma  DPLM.L 
    ** The brokerage downgrades Rentokil  RTO.L  to
"equal-weight" from "overweight" citing risks from the Terminix
integration and competitive pressures 
    ** It raises Bunzl  BNZL.L  to "equal-weight" from
"underweight" seeing a rebased structurally higher margin,
undemanding organic expectations, a healthy bolt-on pipeline and
scope for further shareholder returns in 2024 
    ** MS cuts Brenntag  BNRGn.DE  to "equal-weight" from
"overweight" expecting little by way of upcoming catalysts
following the CMD in December     
    ** It downgrades Eurofins  EUFI.PA  and IMCD  EUFI.PA  to
"underweight" from "equal-weight" seeing an elevated risk to
numbers going through 2024 for both names, and is also cautious
on Securitas  SECUb.ST , keeping its "underweight" rating
    

 (Reporting by Marta Frąckowiak)
 ((marta.frackowiak@thomsonreuters.com))