Veolia Environnement: Berenberg lowers TP

(CercleFinance.com) - Berenberg announced on Thursday that it had lowered its target price for Veolia Environnement shares from E33 to E32, while renewing its Buy recommendation on the stock.


The broker explains that it sees a buy opportunity in the stock, in view of the significant discount it currently commands in relation to the major US groups in the environmental services sector.

Since the European elections, its share price has fallen by around 9%, it points out, which corresponds to twice the fall in the CAC 40 index over the period.

It's true, Berenberg continues, that the cost of equity for French companies has risen as a result of the widening yield spread between OATs and German Bunds, which is now close to 80 basis points.

However, to justify current share price levels, the cost of equity would have to rise by a further 4% to 13.6%, says the analyst in a note.

Berenberg adds that the eventual arrival in power of the RN or the Left-wing Union would not change the situation much for the Group, which generates under 20% of its operating income in France.


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