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Investing.com - Morgan Stanley has upgraded Bouygues SA (EPA:EN) (OTC:BOUYF) from Underweight to Equalweight and raised its price target to EUR44.00 from EUR36.00.
The upgrade comes as Morgan Stanley now believes Bouygues’ Equans division is on track to exceed its 2025 and 2027 margin guidance, with expectations of close to 4.2% ROPA margin in 2025 and 5% margin in 2027.
The investment bank also anticipates Equans will outperform on free cash flow due to better payment terms, milestones, contract quality, and lower restructuring costs.
Morgan Stanley notes that a significant portion of the initial quality perception gap between Equans and peers such as SPIE, Vinci Energies, and Eiffage Energy Systems has closed.
The firm projects a 12% EBIT CAGR for 2026-2028, which is twice that of Bouygues’ peers, and expects this growth to provide continued value accretion of approximately EUR3 per share annually while establishing a solid floor for Bouygues shares.
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