Eiffage Model Updated Slightly, OW Maintained, Dec-27 Target Price Raised to €162
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Eiffage Model Updated Slightly, OW Maintained, Dec-27 Target Price Raised to €162
JPMorgan updated its model after first-quarter revenue and APRR data; group EBIT was cut by about 1% mainly due to the accounting impact of Nové going off-book, with net profit broadly unaffected, while the target price was raised on lower share count and a revaluation of the Getlink stake.
- Group estimates were largely unchanged; consolidated EBIT was estimated to decline by about 1%, mainly due to the deconsolidation of Nové concession company, with a broadly neutral impact at the net profit level.
- Construction revenue estimates were raised and Infrastructure revenue estimates were lowered, mainly reflecting Goyer moving from Infrastructure to Construction; the overall revenue impact is neutral, and similar margins limit the EBIT impact.
- Energy revenue was slightly lowered to reflect weaker-than-full-year-assumption growth in the first quarter due to weather; the report implies roughly 6% growth for the remainder of the year.
- The Dec-27 target price was raised from €158 to €162, implying 19% upside from the current share price cited in the report, driven by a lower share count and a mark-to-market adjustment to the Getlink stake.
- The main pressure comes from a possible extension or increase of the supplementary tax and infrastructure tax in 2026, but valuation support and German contracting exposure remain positive factors.
Report interpretation
Overview
This report is JPMorgan's model update on Eiffage. Eiffage is a leading company in European concessions and public works, with businesses spanning concessions, construction, infrastructure, and energy. The report adjusts forecasts after Eiffage's first-quarter revenue and APRR's first-quarter traffic and revenue disclosures, but emphasizes that there is no major change to the group-level estimates.
Core views
The core view is to maintain an OW recommendation on Eiffage. JPMorgan believes that although the possibility of the 2026 infrastructure tax and supplementary tax being extended or raised will continue to weigh on the share price, Eiffage has valuation support, greater visibility on its long-term strategic direction, and the highest exposure to German contracting activity among peers. On the model side, the roughly 1% EBIT reduction is mainly an accounting effect from Nové going off-book; excluding that factor, the EBIT decline is less than 0.5%, and net profit falls only very slightly.
Analysis framework
The report updates segment forecasts based on first-quarter operating data and values the company using a SOTP framework. The toll-road business is valued using an 8.8% WACC assumption, while contracting businesses are valued at an average 2027E EV/EBIT multiple of about 7x. The model also incorporates the impact of Eiffage's additional purchase of a 1.74% stake in Getlink and marks the Getlink holding to market value.
Methodology notes
Sum-of-the-parts valuation
The report values each business segment separately and then sums them to derive group value; toll-road businesses use a WACC assumption, while contracting businesses use an EV/EBIT multiple.
Weighted average cost of capital
Toll-road valuation uses an 8.8% WACC; higher interest rates or bond yields would push up WACC and lower DCF valuation.
Enterprise value to EBIT multiple
The report values Eiffage's contracting businesses using an average 2027E EV/EBIT multiple of about 7x.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- Eiffage (FOUG.PA)Core coverage stock
- Strengths
- Valuation support, greater visibility on long-term strategic direction, high exposure to German contracting activity, and an expected gradual decline in leverage.
- Weaknesses
- Possible increases in the 2026 supplementary tax and infrastructure tax are weighing on the share price; some segment revenue forecasts were slightly lowered.
- Comparison
- Year to date, absolute return is 8.5% and relative return is 6.2%; over the past month, absolute return is -5.4% and relative return is -4.2%.
- Risks
- Rising interest rates, weaker-than-expected French economic conditions, larger-than-expected fiscal tightening, and contracting margins below expectations.
- GetlinkAsset related to Eiffage's stake
- Strengths
- The mark-to-market adjustment to the Getlink stake is one of the drivers of the target price increase, and the model includes an additional 1.74% stake.
- Weaknesses
- The stake value is affected by market price fluctuations.
- Comparison
- The report does not provide a detailed comparison with other holdings.
- Risks
- Getlink share price volatility could affect SOTP valuation.
- APRRAsset related to Eiffage's concessions business
- Strengths
- The toll-road business is an important part of the group's concessions segment.
- Weaknesses
- First-quarter traffic and revenue forecasts were slightly revised.
- Comparison
- The report does not provide a detailed comparison with other toll-road assets.
- Risks
- A weaker French economy could hurt highway traffic.
Key data
- RatingOWThe report maintains its Overweight recommendation on Eiffage.
- Dec-27 target price€162Raised from €158 to €162.
- Implied upside19%Relative to the current share price cited in the report.
- Consolidated EBIT adjustmentabout -1%Mainly driven by the accounting treatment from Nové concession company going off-book; the decline is less than 0.5% excluding this factor.
- Valuation WACC8.8%Used for toll-road business valuation.
- Contracting valuation multipleabout 7x 2027E EV/EBITUsed for Construction, Infrastructure, Energy and other contracting-related businesses.
- Additional Getlink stake1.74%The model incorporates Eiffage's additional purchase of a 1.74% stake in Getlink.
- 2026E revenue€25,959mnThe chart shows 2026E turnover of 25,959.
- 2027E revenue€26,797mnThe chart shows 2027E turnover of 26,797.
- 2028E revenue€27,677mnThe chart shows 2028E turnover of 27,677.
- 2026E adjusted EPS€11.04The chart shows 2026E adjusted EPS.
- 2027E adjusted EPS€11.85The chart shows 2027E adjusted EPS.
Impact & implications
The implication for the investment view is that the report frames this as a minor model adjustment rather than a change in the fundamental direction. The target price increase comes mainly from a lower share count and a revaluation of the Getlink stake, rather than a meaningful upward revision to core operating forecasts. Tax policy, the French macro backdrop, and contracting margins remain the main risks, but valuation multiples, cash flow yield, de-leveraging trends, and exposure to German contracting activity support the continued positive rating.
Risks
- Rising interest rates and bond yields would increase WACC and affect DCF valuation.
- Weaker-than-expected French economic conditions would affect construction output and highway traffic.
- Greater-than-expected fiscal tightening in France could hurt construction activity.
- Contracting margins could come in below expectations.
- An extension of the 2026 supplementary tax or an increase in the infrastructure tax could continue to weigh on the share price.
What to watch
- Whether the French infrastructure tax and supplementary tax are extended or increased.
- Subsequent traffic and revenue trends at APRR.
- Revenue and margin performance in Construction and Infrastructure after the Goyer transfer.
- Whether the Energy business can achieve about 6% growth over the remainder of the year.
- Changes in Getlink's share price and the value of Eiffage's holding.
- The contribution of German contracting activity to order intake and revenue growth.