On Friday, UBS updated its financial outlook for Euronext NV (ENX:FP) (OTC: EUXTF), raising the price target to €115.00 from €110.00, while reiterating a Buy rating on the stock. The adjustment comes ahead of Euronext's triennial Capital Markets Day (CMD) scheduled for November 8 in Paris. The firm highlighted that Euronext shares have seen a significant upswing this year, with a 27% increase year-to-date and a 9% rise since the H1:24 results were released in late July.
Despite the stock's strong performance, UBS pointed out that Euronext is still trading at a relatively low multiple from a historical perspective. Currently, the stock is trading at 14.9 times forward consensus earnings per share (EPS), which is below its average of 15.6 times from 2015 to the present. This valuation suggests that the stock may still be undervalued.
The anticipation of the upcoming CMD is seen as a potential positive event that could further stimulate investor interest in Euronext shares. UBS expects the market's reaction to this year's CMD to differ from the one that followed the 2021 CMD, where Euronext's shares dipped by 10% in the month after the event. At that time, the shares were trading at a higher multiple of 19.5 times forward EPS.
Furthermore, UBS noted that management at Euronext has established revenue and EBITDA growth targets for the years 2023-2027. These targets are set at 3-4% per annum for revenue and 5-6% per annum for EBITDA, which are slightly below the consensus expectations of 4.1% for revenue and 6.1% for EBITDA. This conservative guidance could potentially be a factor in the current valuation and future investor sentiment.
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