Oddo BHF reiterates its "outperform" rating and €174 target price for Capgemini shares following the announcement of the acquisition of WNS, "a deal that raises concerns despite reasonable metrics."

Yesterday's share price drop (-5.6%) seems very exaggerated given the size of the transaction (11% of Capgemini's market cap) and reflects a clear downgrade in terms of P/E but also in terms of EV/EBIT, the analyst said.

He notes that before the acquisition, Capgemini was trading at a 33% discount to its global peers in terms of 12-month forward EV/EBIT, even though the Q2 trading update showed signs of improvement.

According to Oddo BHF, WNS enables Capgemini to achieve critical mass in banking/insurance to capture mega-deals, while also creating opportunities in the healthcare and travel & leisure sectors.


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