Sopra Group: Feedback from AGM and company contact: a clearer picture on HR Access
BUY, Fair Value EUR70 vs. EUR78 (+30%)
We reiterate our Buy rating but cut our DCF-derived fair value to EUR70 from EUR78 following yesterday’s AGM, as we cut our adj. EPS forecasts by an average 7% for 2013-15 (-EUR5) and as we lower our mid-term adj. EBIT margin projection to 9.5% from 10% (-EUR3). For sure, we had underestimated the time necessary for Sopra to restore HR Access’ margins to decent levels, as well as the temporary negative effect of Sopra’s investments for dealing with IT projects of higher size. However, now these pieces of bad news are priced in, we believe the Sopra story lies in its capability to deliver significant cost savings on HR Access for 2014 and to leverage its investments on projects.
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