SOP: Buy Rating Will Remain Backed By Modestly Reduced Revenue Expectations

Analysts have trimmed their fair value estimate for Sopra Steria Group from EUR 201.90 to EUR 197.60, citing slightly softer revenue growth and margin expectations in line with recent Street price target reductions, while maintaining a positive long term view.

Analyst Commentary

Bullish Takeaways

• Bullish analysts continue to see upside potential to the current share price, as the latest price target remains comfortably above spot levels despite the modest cut.
• The maintained positive rating signals confidence in Sopra Steria Group's ability to execute on its strategy and defend margins in a more challenging demand environment.
• Valuation is viewed as attractive on a medium term basis, with analysts expecting earnings growth and cash generation to support a gradual rerating.
• Exposure to digital transformation and public sector IT spending is seen as a structural growth driver that can underpin revenue resilience over the cycle.

Bearish Takeaways

• Bearish analysts highlight that the reduction in the price target reflects a more cautious stance on near term revenue momentum and project ramp ups.
• There are concerns that cost inflation and wage pressures could limit margin expansion, putting pressure on valuation multiples if growth slows further.
• Execution risks around large scale contracts and integration of prior acquisitions are cited as potential sources of earnings volatility.
• Some analysts see limited scope for significant multiple expansion in the short term, given macro uncertainty and rising competition in the European IT services market.

What's in the News

• A Board meeting is scheduled for December 11, 2025 to consider the appointment of Rajesh Krishnamurthy as Sopra Steria Group’s new Chief Executive Officer (Key Developments).
• The Board of Directors appoints Rajesh Krishnamurthy as the new CEO, effective February 2, 2026, bringing three decades of international technology and transformation experience across Europe, Asia, and the Americas (Key Developments).
• Outgoing CEO Cyril Malargé steps down to pursue a new opportunity. The Board launches a formal process to identify his successor, overseen by a transition team led by the Chief Operating Officer (Key Developments).
• An October 8, 2025 Board meeting is convened to review and acknowledge Cyril Malargé’s decision to resign as Chief Executive Officer (Key Developments).

Valuation Changes

• Fair Value Estimate reduced modestly from €201.90 to €197.60, reflecting slightly softer medium term assumptions.
• Discount Rate edged down from 10.09 percent to 9.87 percent, implying a marginally lower required return for equity holders.
• Revenue Growth trimmed from 2.18 percent to 1.93 percent, indicating a slightly more cautious outlook on top line expansion.
• Net Profit Margin lowered fractionally from 5.81 percent to 5.79 percent, signaling a near unchanged but marginally tighter profitability profile.
• Future P/E eased from 13.79x to 13.57x, pointing to a small downward adjustment in the valuation multiple applied to forward earnings.