On Wednesday, JPMorgan (NYSE:JPM) made a strategic shift in its assessment of Bureau Veritas SA (BVI:FP) (OTC: BVRDF), shifting the stock's rating from Overweight to Neutral. Although the price target remains set at EUR30.60, the firm's stance on the stock has cooled.
The downgrade comes despite a generally positive view on the Testing, Inspection, and Certification (TIC) sector. Growth is expected to stay robust, outpacing pre-COVID levels, bolstered by favorable pricing contributing 3-4% to growth, along with supportive volume drivers. However, the firm acknowledges that the growth rates for companies with above-trend growth are anticipated to align with medium-term guidance soon.
JPMorgan's revised outlook follows a recent pre-close discussion with Bureau Veritas, leading to minor adjustments in their financial model. The analyst forecasts a Q3 organic growth of 11%, with a slowdown to 7% in Q4. The second half of the year is projected to see a growth of 9.2%, aligning with the company's guidance of approximately 9%. This growth rate is also projected for the full year 2024 estimates.
An additional factor influencing the downgrade is the potential for another stock placement by Wendel, a key shareholder in Bureau Veritas, as the lock-up period expires this week. This could introduce further volatility in the stock's performance in the near term.
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