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Common Music Group’s operational headquarters in Santa Monica, California.
Bing Guan | Bloomberg | Getty Pictures
Morgan Stanley has named eight shares to purchase forward of a hotly anticipated earnings season in Europe.
Shares within the area have risen this yr on the primary indicators of moderating inflation throughout Europe. Nonetheless, the influence of sluggish progress and the struggle in Ukraine stays key considerations for buyers.
Listed below are the European shares that the Wall Road financial institution thinks will outperform, even because the broader market is more likely to take successful on earnings.
Morgan Stanley’s 8 European inventory picks
| Firm | Ticker | Earnings date | Foreign money | Share value | Value goal | Upside (%) |
|---|---|---|---|---|---|---|
| Common Music Group | UMG-AMS | 02-Mar | EUR | 23.43 | 35.00 | 49.38 |
| Teleperformance | TEP-PAR | 23-Feb | EUR | 252.10 | 320.00 | 26.93 |
| SCOR | SCR-PAR | 09-Feb | EUR | 23.83 | 30.00 | 25.89 |
| Elis SA | ELIS-PAR | 02-Mar | EUR | 15.75 | 18.80 | 19.37 |
| Sartorius | SRT-ETR | 26-Jan | EUR | 350.50 | 415.00 | 18.40 |
| Accor | AC-PAR | 08-Mar | EUR | 29.19 | 34.00 | 16.48 |
| SAP | SAP-ETR | 01-Mar | EUR | 106.58 | 123.00 | 15.41 |
| Compass Group | CPG-LON | 26-Jan | GBP | 19.32 | 22.00 | 13.90 |
Supply: Morgan Stanley, Jan. 20
Here is what they needed to say about 4 shares from the above desk:
Common Music Group – Music distribution
UMG reported 13.3% natural progress and beat expectations final quarter. The corporate additionally named former CEO of Paramount Photos Sherry Lansing as chair earlier this yr.
Morgan Stanley says:
“We expect the stock to rally into earnings, due in early March. We think consensus forecasts for Subscription & Streaming revenue growth and margins in 2023 are too low and believe FY’22 earnings will be a catalyst for a reassessment of both metrics by investors.”
Teleperformance – Outsourced buyer care
Teleperformance was investigated by the Colombian authorities after it was accused in a Time journal article of violating “the right to dignity, work and social security towards workers” who average TikTok movies on the firm. Its personal inside audit recognized no important adversarial findings.
Morgan Stanley says:
“Teleperformance shares have been under scrutiny since November following the outbreak of negative news flow around its Content Moderation in Colombia. We continue to maintain that those risks were overblown and underlying Teleperformance remains a well managed entity. More importantly none of this news flow alters the fundamental growth and earnings profile of the company.”
Elis – Outsourced laundry companies
Elis beat market expectations in its third quarter on income and mentioned there was no slowdown in demand throughout the 29 nations it operates in. Following hovering power prices over the summer time, Elis additionally mentioned it had negotiated value will increase with clients that will kick in between Oct. 2022 and Jan. 2023.
Morgan Stanley says:
“Elis offers resilient GDP+ growth through the cycle, which is expected to be structurally higher post COVID (driven by increased demand for hygiene, reliability, accountability and ESG).”
Accor – French hospitality firm
Accor is implementing what it calls an “asset light” technique in an effort to simplify its steadiness sheet. Final week, it offered a $460 million stake in China’s H World motels, which lowered its web debt. Following the asset disposal, Barclays fairness analysis group upgraded the inventory to a maintain.
Morgan Stanley says:
“We think there is a good tactical setup for Accor, with RevPAR [revenue per available room] data running ahead of FY23 consensus (+4%) and the sale of H World helping to address lingering concerns over operational and strategic focus.”
— CNBC’s Michael Bloom contributed reporting.
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