** 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 | - |
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))
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