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On Friday, Goldman Sachs began its coverage on Havas NV (HAVAS:NA) with a Buy rating, accompanied by a price target of EUR1.90. The firm highlighted Havas’ promising risk/reward profile, noting that its shares are trading at a significant discount compared to its peers and pointing out the company’s strong potential for earnings growth.
The analysis by Goldman Sachs emphasized several key factors that contribute to Havas’ favorable outlook. The company’s geographic and category exposure, particularly its 29% revenue from the Health sector, and its mix of local and regional clients, were seen as strengths. Additionally, Havas’ net new business and robust balance sheet, with 0.5x net cash/EBITDA excluding leases projected for the end of 2024, were underlined as positive indicators.
Goldman Sachs expects Havas to achieve earnings per share (EPS) growth that surpasses its competitors over the medium term. This projection is based on anticipated stronger margin expansion from a lower starting point, increased merger and acquisition activity, and share buybacks starting in the second half of 2025.
Despite its relatively smaller scale in the U.S. media market, which may require attention over time, Havas has reportedly kept pace with its peers in terms of organic net revenue growth since 2021. Goldman Sachs forecasts that Havas will outperform its peers in organic growth in 2025 due to a more resilient revenue profile and the impact of new business. From 2026 onwards, the firm expects Havas to grow in line with its peers, with a revenue/earnings per share compound annual growth rate (CAGR) of approximately 3%/13% from 2024 to 2028, compared to the peer average of 3%/8%.
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