Jefferies upgrades Prosus stock rating to Buy from Hold on ecosystem strategy

Investing.com - Jefferies upgraded Prosus NV (AS:PRX) (OTC:PROSY) to Buy from Hold on Wednesday, while significantly raising its price target to EUR65.50 from EUR37.00. The upgrade follows an impressive 63.7% stock price gain over the past year, with the company’s market capitalization now exceeding $132 billion.

The upgrade comes more than a year after CEO Fabricio Bloisi implemented what Jefferies calls a "bold new path" for the technology investment company, transitioning toward an investor-owner-operator model for its technology businesses. InvestingPro data shows the company maintains a strong financial position with a current ratio of 3.54, indicating robust liquidity to support its strategic initiatives.

Jefferies cited Prosus’s substantial resources and strong incentives as factors suggesting the company’s "Ecosystem Strategy" will likely succeed in the long term. The company’s revenue grew by 12.9% in the last twelve months, while management has been actively buying back shares. Get access to 10+ additional exclusive insights with InvestingPro.

The firm believes investors will eventually conclude that Prosus is worth more than the sum of its parts, indicating potential for significant value creation beyond its individual holdings.

According to Jefferies, "The Great Unwind of the conglomerate discount has begun," suggesting the market has started recognizing increased value in Prosus’s strategic direction and operational approach.

In other recent news, Prosus is on the verge of receiving approval from EU antitrust regulators for its $4.74 billion acquisition of Just Eat Takeaway. This development comes after Prosus addressed competition concerns by proposing to gradually reduce its 27.4% stake in Delivery Hero and relinquish its board seat at the company. These measures are intended to alleviate regulatory worries about market dominance. The acquisition is significant for Prosus, as it aligns with its strategic investment goals. The approval process has been closely monitored by investors who are keen on the potential impact on the European food delivery market. The deal underscores the ongoing consolidation trend in the technology and food delivery sectors. This recent development highlights the importance of regulatory compliance in large-scale mergers and acquisitions.

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