Capgemini H1 26 results preview

研报英文原文证据摘录

Capgemini H1 26 results preview

Forecast returns

Forecast price appreciation 19.6%

Forecast dividend yield 4.5%

Forecast stock return 24.1%

Market return assumption 7.7%

Forecast excess return 16.4%

Company Description

Capgemini is Europe's largest domiciled IT services group with over 340k staff but still sub-

5% share globally in a very fragmented market. It IPOed in 1985. Since the 2007 acquisition

of Kanbay, Capgemini has built a strong offshore footprint (59%), making it cost competitive,

while investments in cloud, cyber and intelligent industry (augmented by the 2020 Altran

acquisition) have improved its growth profile. It has a strong cash generation profile, with

dividends, buybacks and M&A all valid use cases. Aiman Ezzat has been CEO since 2020.

Competitors include Accenture, Cognizant, Infosys, TCS and the Big Four.

Valuation Method and Risk Statement

Investing in the IT Services sector entails risk. Consulting and systems integration activities are

cyclical and affected by the general business investment climate. The activities are

operationally geared. Outsourcing contracts can be large and potentially carry substantial

pricing and execution risk. The shift to cloud delivery of software could impact the volume

and complexity of systems integration and outsourcing relationships while the emergence of

AI poses a threat to traditional IT Services' companies by adding to pricing pressure and

creating substitution risk. Relative to its peers Capgemini's business is more biased to project

activity which has historically shown itself to be more economically sensitive. The recent

acquisition of WNS will carry integration risks and increase financial leverage levels. Our price

target is based on an equally-weighted blend of a EV/NOPAT and 2027E equity FCF target.