(Reuters) – Elior goes public on Friday after an increase in recommendation by JPMorgan, with analysts judging that the French collective catering group is well positioned to succeed in its restructuring, after several difficult years.
On the Paris Stock Exchange, the action rose 6% to 2.65 euros around 11:00 GMT, among the best performances of the SBF 120 index, then down 0.02%.
In a more general note on the European hotel and catering sector, JPMorgan raises its recommendation on Elior shares from “neutral” to “overweight” and its price target from 3.5 to 4.5 euros.
Analysts say Chairman and CEO Daniel Derichebourg is taking the right steps to turn around the company, focusing on improving the contract mix and recovering margins.
The note welcomes clear signals of Elior’s operational improvement, notably through price increases, efficiency gains and the successful exit of unprofitable contracts.
“While in the short term, Elior remains selective and plans to prioritize new contracts with above-average profitability, the next step will be to improve overall contract dynamics, which are lagging behind by relative to its peers for some time,” analysts predict.
JPMorgan also anticipates that Elior’s profitability should return to its pre-COVID-19 crisis level by 2027, with the group targeting a target Ebita margin of 3.8%.
The note, however, mentions the risks weighing on the stock, including the pressure of inflation and possible delays in the recovery of the group’s underlying margin.
(Written by Elena Smirnova, edited by Augustin Turpin)
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