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Investing.com -- J.P. Morgan has upgraded Bouygues (EPA:BOUY) to “overweight” from “neutral,” raising its December 2026 price target to €49 from €38, citing cleared risks and improved prospects from Equans as well as possible French telecom consolidation, in a note dated Tuesday.
The brokerage noted that Bouygues’ earlier challenges, guidance uncertainty and concerns over potential fibre joint venture consolidations, have eased after management ruled out exercising call options on its fibre JVs for now.
Equans, which Bouygues bought from Engie in 2021 for €6.7 billion, is flagged as a key driver of upside. J.P. Morgan said the unit’s profitability outlook appears conservative compared to peers.
Bouygues had initially set a 2027 EBIT margin target of 5%, but the bank now assumes a 7% margin mid-term, lifting its Equans valuation from €10 billion to €13.6 billion, with potential to exceed €16 billion.
The re-rating of the wider business services industry, supported by themes such as the energy transition and digital infrastructure, has also strengthened the outlook for Equans.
In addition, J.P. Morgan pointed to growing momentum for consolidation in the French telecom sector, which could bring synergies and market repair.
Reports suggest that discussions around SFR’s restructuring have accelerated, with billionaire Patrick Drahi reportedly open to a deal at €23 billion, down from €30 billion earlier this year.
Bouygues, whose telecom unit accounts for a third of the bank’s valuation model, is seen as a major beneficiary of any deal.
Despite lowering its revenue forecasts by 1% annually, J.P. Morgan lifted long-term earnings expectations, projecting 10% annual EPS growth.
The brokerage’s sum-of-the-parts valuation, applying a reduced conglomerate discount of 15%, underpins the new €49 price target, implying 33% upside from Bouygues’ closing price of €36.97 on Aug. 25.