Bouygues leads CAC 40 as Morgan Stanley raises target price to €44

Bouygues leads the CAC 40, with Morgan Stanley upgrading its recommendation to "in line" and raising its target price to €44. The brokerage firm praises Equans' strong performance in margins and cash generation, and sees potential for continued revenue growth and acquisitions. Bouygues' attractive free cash flow yield and low net debt-to-EBITDA ratio provide a floor for the share price, with additional upside possible in a concentrated French telecoms market.

Morgan Stanley has upgraded its rating on French conglomerate Bouygues to "equal-weight" from "underweight" and raised its target price to €44. The brokerage firm commended Bouygues' multi-technical services unit, Equans, for its strong performance in margins and cash generation. Morgan Stanley expects Equans to beat its 2025 and 2027 margin guidance due to better contract quality and lower costs, potentially adding around 3 euros per share to Bouygues' value by 2028 Bouygues' Equans unit drives Morgan Stanley upgrade^[2].

Bouygues' attractive free cash flow yield and low net debt-to-EBITDA ratio provide a floor for the share price. The company's strong position in the French market, particularly in the telecoms sector, offers potential for continued revenue growth and acquisitions. The upgrade reflects Morgan Stanley's optimism about Bouygues' ability to capitalize on secular trends and strategic opportunities.