VEOLIA : Deutsche Bank upgrades its recommendation to 'buy
April 21, 2023 at 10:18 am EDT
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On Friday, Deutsche Bank raised its recommendation on Veolia shares from 'hold' to 'buy', citing valuation issues in particular.
The research firm, which also raised its target from 24 to 33 euros, acknowledges that the environmental services group could be a victim of the economic slowdown, but says it is confident in the trajectory of its results.
The analyst also believes that the company could benefit from inflationary pressures, since nearly 70% of its contracts, notably with municipalities, are indexed to inflation.
And although only 15% of its sales come from cyclical businesses, Veolia shares have recently performed like a cyclical stock, argues Deutsche Bank, which attributes this phenomenon to the resilience of the European economy and the downturn in energy prices.
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Veolia Environnement is the world leader in environmental management services. Net sales break down by activity as follows:
- water-related services (40.6%; No. 1 worldwide): water resources management, drinking water distribution and delivery, wastewater collection, treatment and recovery, engineering, design, construction of water treatment facilities and customer relationship management, etc.;
- waste management services (32.4%; no. 1 worldwide): collection, treatment and recycling of liquid, solid, non-hazardous and hazardous waste, waste treatment and recovery through composting, energy recovery from waste, etc. Veolia Environnement also provides urban waste management services (maintenance and cleaning of public spaces, provision of mechanized street cleaning and façade treatment services), maintenance of industrial sites, and dismantling of industrial facilities and equipment at the end of their useful life;
- energy services (27%; No. 1 in Europe): delegated management of urban heating and air conditioning networks, management of thermal and multi-technique services (operation of heating systems, facility design, construction, and maintenance, etc.) and industrial services (industrial process analysis, production equipment operation, service, and maintenance), general management of buildings and public lighting.
Net sales are distributed geographically as follows: France (21.5%), Europe (41.9%), North America (7.4%), Asia (5.6%), Africa and the Middle East (4.9%), Pacific (4.3%), Latin America (4%) and other (10.4%).
VEOLIA ENVIRONNEMENT 
