MS sees M&A, US revenues boosting European business services in 2025
09/01/2025 11:11
** Morgan Stanley upgrades its sector view on
European business services to "attractive" from
"in-line" based on strong M&A growth optionality and
high U.S. revenue exposure
** Its preferred sub-sectors are credit bureaus,
testing & inspection and distribution
** It is more cautious on staffing and facilities
management, where it sees unattractive end-markets and
downside risks to earnings
** MS names credit data firm Experian EXPN.L its
top pick citing robust outlook for growth and margins
** It remains positive on Bureau Veritas BVI.PA ,
Diploma DPLM.L and Azelis AZE.BR ; it is cautious on
Adecco ADEN.S , Securitas SECUb.ST and Eurofins
EUFI.PA
** It downgrades ISS ISS.CO to "underweight" on
risks from weaker organic growth and margin
deceleration in 2025
** MS cuts Hays HAYS.L to "underweight" due to
limited FCF generation and a risk of dividend cut, and
after a profit warning from peer SThree STEMS.L
** It upgrades Ferguson FERG.N to "overweight" on
U.S. exposure and indications of improving underlying
end-markets through H2
** It sees scope for binary but material outcomes
for Teleperformance TEPRF.PA and companies exposed to
U.S. construction like Ashtead AHT.L , Ferguson and
Rentokil RTO.L
MORGAN STANLEY RATINGS:
COMPANY RATING OLD RATING
Ferguson overweight equal-weight
Ashtead overweight -
Azelis overweight -
Elis ELIS.PA overweight -
Experian overweight -
Teleperformance overweight -
Hays underweight equal-weight
ISS underweight equal-weight
Adecco underweight -
Securitas underweight -
Brenntag BNRGn.DE equal-weight -
IMCD IMCD.AS equal-weight -
Intertek ITRK.L equal-weight -
RS Group RS1R.L equal-weight -
Page Group PAGE.L equal-weight -
(Reporting by Marta Frąckowiak)
((marta.frackowiak@thomsonreuters.com))