MS ups TietoEvry, sees set-up through 2024 as more constructive

Tieto Oyj

15/01/2024 10:15

** Morgan Stanley upgrades Finnish IT services provider
TietoEvry  TIETO.HE  to "overweight" from "equal-weight" citing
a relatively undemanding set-up into 2024, and easing H2
comparables
    ** It sees the set-up into next year as relatively
undemanding, depending on the timing of a cyclical demand
recovery, with a potential for expectations to grow should the
IT spending environment improve  
    ** According to the brokerage, the stock offers a good way
to play the demand cycle recovery in H2 2024/2025, with
strategic optionality offering further potential upside
    ** Although the company still has about 15% group revenue
exposure to the more challenged infrastructure outsourcing
market, about 60% of the business mix is skewed towards
higher-growth and higher-margin software and digital services,
it says
    ** A soft 2024 guide could see further downside for the
shares, but the broker sees it limited due to current market
expectations
    ** MS says the current valuation offers "compelling" value,
largely capturing concerns such as 2024 and 2025 guidance, cash
flow conversion, and strategic review conclusions
    ** Out of 14 analysts that cover the stock, six rate it
"strong buy" or "buy", six rate it "hold", and two rate it
"strong sell"
   

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