On Tuesday, Deutsche Bank adjusted its stance on JCDecaux SA (DEC:FP) (OTC: JCDXF) stock, changing the rating from Buy to Hold, while maintaining a price target of EUR 22.
The revision follows a period of notable performance for the out-of-home (OOH) media sector, including JCDecaux and its peer Stroeer, which have both experienced strong revenue growth since the beginning of the year.
The analyst from Deutsche Bank noted that the sector's robust start is likely to extend into the second quarter, propelled by events such as the UEFA Euro 2024 and the Paris Olympics. However, expectations are set for a slow down in the latter half of the year due to more challenging comparative figures from the previous year.
Despite a positive outlook on the OOH sub-sector and a roughly 20% rally in shares of JCDecaux and Stroeer year to date, the analyst anticipates fewer near-term catalysts for JCDecaux, as the market has already accounted for the potential Olympic boost.
Deutsche Bank's report also highlighted JCDecaux's sustained exposure to global OOH growth over multiple years. Still, the firm suggests that the current market conditions and the anticipated performance trajectory have been sufficiently factored into the current valuation, leading to the decision to downgrade the stock to Hold.
In contrast, Stroeer, another company within the same sector, has been identified as the preferred choice by Deutsche Bank. The firm's decision is based on Stroeer's stronger growth momentum, superior cash generation, and potential for value realization. Consequently, Deutsche Bank maintains a Buy rating on Stroeer, setting a new price target of EUR 74, which implies a 14% upside from the previous target.
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