Teleperformance a 'no-go zone' for some, but could attract 'deep value', says RBC

TELUS International (CDA)

28/03/2024 11:38

** Teleperformance  TEPRF.PA  has become a "no-fly zone" for
many investors, RBC says as it slashes its PT by 40.5% to 125
euros, still about 30% above the stock's current price of 90.44
euros
    ** "Based on our conversations with investors, (we) think
the stock has become a no go zone for some until there is
tangible change at the top of the organisation" - RBC 
    ** With no activist intervention or a takeover bid, RBC sees
the current succession timetable as unlikely to alter
    ** The call centre firm's equity value erosion is partially
self-inflicted, RBC also flags, adding its messaging around
GenAI is less coherent and constructive than that of its key
peers Concentrix  CNXC.O  and Telus  TIXT.TO  
    ** "Despite having sympathy with the notion that
(Teleperformance) has no crystal ball, as market leader it is
incumbent on management to take a bolder view," RBC says
    ** The broker however disagrees with investors who think
Teleperformance is "headed to zero" 
    ** "The 17% FY24E FCF yield could attract deep
value/activist/(private equity) interest sooner rather than
later," RBC adds
    ** RBC reiterates "outperform" rating but adds "speculative
risk" to it, adding "the valuation ignores the need for complex
hybrid (customer experience) delivery for the foreseeable
future"

 (Reporting by Piotr Lipinski)
 ((piotr.lipinski@tr.com))