VEOLIA ENVIRONNEMENT : BofA upgrades its recommendation to 'buy
January 29, 2024 at 10:02 am EST
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Bank of America on Monday raised its recommendation on Veolia shares from 'neutral' to 'buy', with a price target raised from 29.5 to 34 euros, equivalent to a 15% upside potential.
In a research note, the broker expresses optimism about the February 29 investor day, which it sees as a 'catalyst' likely to reduce the conglomerate discount displayed by the share.
Indeed, BofA expects the utilities group to unveil "ambitious" targets for the day, namely organic growth of 5% accompanied by an average annual increase in Ebitda of 7% by 2026, which would generate double-digit growth (+15.5%) in earnings per share (EPS).
Looking beyond the upcoming investor day, the broker adds that it expects European PMI activity indices to reach a favorable "inflection point" by the end of the first half of the year.
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Veolia Environnement is the world leader in environmental management services. Net sales break down by activity as follows:
- water-related services (40.6%; No. 1 worldwide): water resources management, drinking water distribution and delivery, wastewater collection, treatment and recovery, engineering, design, construction of water treatment facilities and customer relationship management, etc.;
- waste management services (32.4%; no. 1 worldwide): collection, treatment and recycling of liquid, solid, non-hazardous and hazardous waste, waste treatment and recovery through composting, energy recovery from waste, etc. Veolia Environnement also provides urban waste management services (maintenance and cleaning of public spaces, provision of mechanized street cleaning and façade treatment services), maintenance of industrial sites, and dismantling of industrial facilities and equipment at the end of their useful life;
- energy services (27%; No. 1 in Europe): delegated management of urban heating and air conditioning networks, management of thermal and multi-technique services (operation of heating systems, facility design, construction, and maintenance, etc.) and industrial services (industrial process analysis, production equipment operation, service, and maintenance), general management of buildings and public lighting.
Net sales are distributed geographically as follows: France (21.5%), Europe (41.9%), North America (7.4%), Asia (5.6%), Africa and the Middle East (4.9%), Pacific (4.3%), Latin America (4%) and other (10.4%).
VEOLIA ENVIRONNEMENT 
