(News Bulletin 247) – The American bank lowered its opinion on the value to “line weighting” against “overweight” previously, despite a valuation that it considers attractive.

Value previously prized by design offices, Teleperformance has seen its love rating tarnished since the announcement of its plan to take over the Luxembourg company Majorel last week.

Morgan Stanley thus lowered its opinion on Thursday on the title from “overweight” – the equivalent of buying at the American bank – to “online weighting”. It also slashed its price target to 240 euros against 320 euros previously. Which obviously does not help Teleperformance’s business on the stock market. The action dropped 6.8% at the start of the afternoon in a market, admittedly, in sharp decline with growth stocks suffering.

The bank recognizes that the group’s current valuation is attractive given the company’s dynamic growth prospects. But she notes that for two quarters the specialist in outsourced customer relations has published activity a tad below expectations, which contrasts with her good habits.

Majorel, an acquisition with good and less good

Above all, the bank considers that the company lacks catalysts in the face of several adverse elements, citing in particular a more difficult macroeconomic environment.

Morgan Stanley also evokes the acquisition of Majorel. This 3 billion euro project has both positive and negative elements. Among the positive points, this external growth operation brings geographical complementarities, an increase in net earnings per share and an essential scale effect in a fragmented sector. But Morgan Stanley notes that this takeover project does not significantly add artificial intelligence capabilities, while it is “a key point of attention for investors”.

The establishment precisely wonders about the evolution of Teleperformance’s activity in the face of the emergence of artificial intelligence – and the rise of ChatGPT – the bank mentioning an “unknown structural impact”.

During its first quarter revenue presentation last week, Teleperformance presented artificial intelligence as an opportunity. The company has also developed its own product “TP GPT”‘ which integrates technologies from OpenAI, the company behind ChatGPT. The company considers that 20% to 30% of its volumes could be automated in the next three years and stressed that AI could “optimize its operations”. She gave as an example a telephone call whose length was reduced by 39% thanks to these technologies.

Towards slightly weaker growth?

Morgan Stanley believes management’s comments on the rise of AI are consistent with its views. However, the bank believes that the development of these technologies could mean “that the composition of the business will change and, at this stage, the likely outcome seems to be slightly lower growth with a higher margin”.

Last week, Stifel also downgraded its opinion from “buy” to “hold” on the stock. The financial intermediary judged that there was little reason for the stock to rebound over the next six to twelve months, particularly in view of questions about the execution of the Majorel takeover and the uncertainties caused by artificial intelligence and ChatGPT, which may weigh on investor confidence.