Groupe Steria: Feedback from SSCL conference call: 2014 should be a great year
BUY, Fair Value EUR18 vs. EUR17 (+24%)
We reiterate our Buy rating and up our DCF-derived fair value to EUR18 from EUR17 following the conference call held yesterday on the SSCL joint-venture. We raise our 2014-15 sales ests. by 1%, while we increase our adj. EPS forecasts by 1% for 2014 and 3% for 2015 (but respectively 5% and 6% before minority interests) on higher margin assumptions. We consider the signing of the SSCL deal with the Cabinet Office and a possible Police contract in the UK in H1 2014 should make 2014 a great year for Steria. We estimate the SSCL contract adds 6ppt of growth and margin accretion which are poised to accelerate the rerating on the stock.
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