(BFM Stock Exchange) – The bank has noted its advice to “overlap”, equivalent to buying in its terminology, wrapped by the prospects of Equans. Even if the announcement of the vote of confidence does not help, JPMorgan thinks that political uncertainty in France will not fundamentally change the situation for the Bouygues action.

Like the other construction groups, Bouygues suffered from the announcement on Monday by François Bayrou. The Prime Minister said that he would submit his government to a vote of trust on September 8, also paving the way for a dismissal.

Several political parties have also announced that they would not vote for confidence in the context of this ballot, including La France Insoumise, the National Rally, the Socialist Party or even environmentalists. The spectrum of a political blocking seizes markets again, consequently.

Bouygues lost 4.5% on Monday following this announcement. This Tuesday, the conglomerate present in construction, road work, telecoms (via Bouygues Telecom), media (with TF1) or multi-technical services (such as ventilation, heating, fire protection, via its Equans subsidiary) still loses 1.35% in the middle of the afternoon. This withdrawal is quite significantly lower than those of Eiffage (6.5%) and Vinci (-5.2%).

JPMorgan can provide support to the title. The American bank has indeed gone from “neutral” to “overlap”, equivalent to buying, on the title, while enhancing its course target at 49 euros, against 38 euros. This new target gives a potential of 32.5% to Bouygues action during Monday closing.

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Two uncertainties levées

The establishment had two reservations on the file. First, the bank estimated that consensus (forecasts or average expectations of analysts) was too ambitious for Bouygues Telecom. However, during the publication of its results, the company lowered its prospects for 2025 in its telecom branch, writing that the turnover invoiced to customers would be “slightly higher or slightly lower” than that of 2024, depending on the duration and intensity of the competitive pressure in France. Previously, the group anticipated a “slight increase” of this turnover compared to 2024.

Consensus was thus able to adjust and JPMorgan believes that an uncertainty has been lifted.

Secondly, the establishment feared that Bouygues has options to climb to the capital of joint ventures in the deployment and financing of optical fiber. Bouygues holds 49% of two companies, SDAIF and SDFAST, companies in which the remaining 51% are owned by Vauban Infrastructures. The bank maintained that if Bouygues had become the majority at Sdaif, the group should have consolidated the debt of 700 million euros in this company in its accounts which would have weighed on its cash generation and potentially on its action.

But during the conference call with analysts after the publication of the second quarter results, management excluded the possibility of exercising this option, reports JPMorgan which was therefore reassured.

Catalysts

Now that these Damoclès swords have disappeared, Jpmorgan focuses more on the valuation of the title it considers attractive as well as in two catalysts.

The establishment quotes the prospects of Equans that Bouygues had bought in Engie in 2021 for just over 7 billion euros debt included. At the time, the market had considered this price high and worried about the important project that awaited Bouygues, namely the recovery of the margins of Equans.

The group has since rather reassured on this last point. JPMorgan expects that Equans exceeds its target of operating margin of activity, expected at 5% in 2027. The bank estimates that this rate will reach 7% in the medium term, because SPIE, a comparable Equans, has now increased its margin from 6% to 7.5% with a rate which should be 8% in the medium term.

The other catalyst comes from the consolidation of telecom operators in France, with many press articles reporting that SFR could potentially be bought by one of its competitors, so Bouygues, Orange or Iliad.

“Bouygues would be one of the main beneficiaries of potential consolidation, its French telecom unit representing a third of our ‘Sum of the Parts’ (a valuation method which consists in valuing separately each activity of a group and then adding them by applying a conglomerate discount, editor’s note)”, note JPMorgan.

Admittedly, the announcement of François Bayrou, with a potential fall in the government, hardly helps the title, recognizes the bank. But JPMorgan nuance. The establishment believes that this uncertainty does not change the prospects for consolidation in telecoms in France, and could rather lower the price of SFR. In addition, the bank argues that “investments that support the growth of Equans (a third of which come from France) are largely structural and should not be penalized”.