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Robust International Order Intake Will Reshape Urban And Green Infrastructure

Published
13 Nov 24
Updated
09 Oct 25
AnalystConsensusTarget's Fair Value
€42.91
11.3% undervalued intrinsic discount
09 Oct
€38.07
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1Y
29.1%
7D
-0.9%

Author's Valuation

€42.9111.3% undervalued intrinsic discount

AnalystConsensusTarget Fair Value

Last Update09 Oct 25
Fair value Increased 1.71%

Bouygues' analyst price target has increased modestly from €42.19 to €42.91, as analysts cite a combination of limited downside at current valuations and recent upgrades in firm outlook.

Analyst Commentary

Research coverage of Bouygues continues to reflect a mix of optimism over improved outlook and remaining caution regarding valuation headwinds. Recent analyst updates highlight both the positive drivers and lingering concerns around the company’s shares.

Bullish Takeaways
  • Bullish analysts have raised price targets notably higher, with forecasts reaching up to EUR 56. This is due to improved company guidance and stronger earnings potential.
  • Recent upgrades in analyst ratings reflect a view that previous overhangs have been addressed. This may support investor confidence and share price momentum.
  • Several analysts now see limited downside risk at current valuation levels and suggest the stock offers a favorable risk-reward profile in the near term.
  • Upgrades to "Overweight" ratings are tied to expectations of more stable future performance. Management actions are anticipated to bolster execution and growth prospects.
Bearish Takeaways
  • Bearish analysts have trimmed their price targets due to ongoing concerns regarding Bouygues' valuation after recent price movements.
  • Not all analyst outlooks have turned positive. Some maintain neutral stances due to lingering uncertainties about the sustainability of growth improvements.
  • Cautious commentary emphasizes that, despite upgrades, significant upside could be limited unless Bouygues delivers further operational execution or market conditions improve.

What's in the News

  • Bouygues SA has scheduled a Board Meeting on July 30, 2025, to finalize the first-half 2025 financial statements. (Key Developments)
  • The company provided 2025 earnings guidance and is aiming for a slight increase in sales and current operating profit compared to 2024, despite an uncertain global environment. The estimated effects of new French laws on net profit remain at around EUR 100 million. (Key Developments)
  • The board has announced the appointment of Stéphane Stoll as Chief Financial Officer, effective August 1, 2025, succeeding Pascal Grangé who will retire in 2026. Stéphane Stoll brings extensive experience at Bouygues, including leadership roles in Energies & Services and Equans. (Key Developments)

Valuation Changes

  • Consensus Analyst Price Target has risen slightly, moving from €42.19 to €42.91. This reflects modest optimism in valuation assumptions.
  • Discount Rate edged down marginally to 10.47%, compared to the previous 10.48%. This suggests a small reduction in perceived investment risk.
  • Revenue Growth expectations have declined, now at 0.99% versus the earlier 1.08%. This indicates a more conservative sales outlook.
  • Net Profit Margin increased fractionally, from 2.31% to 2.32%, pointing to improved expectations for profitability.
  • Future P/E ratio rose slightly to 16.64x from 16.43x. This signifies a modestly higher valuation multiple applied to projected earnings.

Key Takeaways

  • Robust construction backlog and green initiatives position the company to capture higher-margin contracts and benefit from sustained infrastructure demand and regulatory trends.
  • Improved margins across business units, along with strong cash generation and disciplined financial management, support ongoing growth investment and mitigate market volatility.
  • Intense competition, market slowdowns, and rising financial constraints threaten Bouygues' revenue and margin growth across telecom, construction, and energy segments.

Catalysts

About Bouygues
    Operates in the construction, energy, telecom, media, and transport infrastructure sectors in France and internationally.
What are the underlying business or industry changes driving this perspective?
  • Bouygues' €33 billion construction backlog, buoyed by strong international order intake (notably outside France for Colas in EMEA, Asia-Pacific, and North America), provides solid multi-year revenue visibility, positioning the company to benefit from ongoing infrastructure demand in urbanizing markets and government green investment-supporting future revenue and EBITDA growth.
  • Strategic progress in decarbonization and sustainability (e.g., rollout of low-carbon cement technology at Bouygues Construction, renewable energy PPAs at Bouygues Telecom, and biodiversity initiatives at Colas) aligns the group with increasing regulatory and client requirements for green construction and infrastructure, enhancing the probability of higher-margin, higher-value contracts and improving long-term group net margins.
  • Equans' operating margin is outperforming targets (revised up to 4.2% for 2025 vs. original 4%, with a 5% target by 2027), supported by the rationalization of dilutive businesses and capacity to pursue M&A in profitable countries; these operational shifts-combined with growth in segments like data centers and energy transition projects-are expected to expand group margins and cash flow conversion in coming years.
  • Bouygues Telecom's growing fiber (FTTH) and convergent network customer base (with 84% of fixed-line customers on fiber), ongoing customer acquisition, and integration of La Poste Telecom are set to boost recurring revenues and stabilize long-term cash flows-even as the current market is competitive-providing a structural offset to cyclical earnings volatility from other segments.
  • The group's strong liquidity position (€13.4 billion), improving working capital discipline (with sharp increases in free cash flow before WCR vs. prior years), and a reduction in net debt year-on-year-even as acquisitions continue-enhance financial flexibility for further growth investments, margin improvement, and potential shareholder returns, ultimately supporting both earnings growth and valuation re-rating.

Bouygues Earnings and Revenue Growth

Bouygues Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?
  • Analysts are assuming Bouygues's revenue will grow by 1.1% annually over the next 3 years.
  • Analysts assume that profit margins will increase from 1.8% today to 2.3% in 3 years time.
  • Analysts expect earnings to reach €1.4 billion (and earnings per share of €3.61) by about September 2028, up from €1.0 billion today. However, there is some disagreement amongst the analysts with the more bullish ones expecting earnings as high as €1.6 billion.
  • In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 16.2x on those 2028 earnings, up from 13.0x today. This future PE is greater than the current PE for the GB Construction industry at 13.0x.
  • Analysts expect the number of shares outstanding to grow by 1.1% per year for the next 3 years.
  • To value all of this in today's terms, we will use a discount rate of 10.67%, as per the Simply Wall St company report.

Bouygues Future Earnings Per Share Growth

Bouygues Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?
  • The telecom market remains highly competitive, especially in France, with recent aggressive pricing (notably from SFR) affecting both fixed and mobile segments, which has already resulted in pressure on Average Revenue Per User (ARPU) and is likely to constrain future revenue and margin growth.
  • Equans, a key contributor to group results, is facing temporary slowdowns in data centers and gigafactories due to technological shifts and slower-than-expected growth in underlying markets like electric vehicles, which could limit order intake and revenue growth if these sectors do not rebound as anticipated.
  • The construction and Colas segments face cyclical and macro risks: seasonality, election-driven public spending slowdowns (especially in France), and region-specific headwinds (e.g., North American weather disruptions), exposing near-term revenues and creating volatility in margins.
  • Bouygues' working capital requirements remain sensitive to payment cycle normalization after two exceptional years, and modest improvements in net debt and gearing are partly offset by continued acquisitions and a substantial dividend payout, implying potential constraints on financial flexibility and net earnings if conditions deteriorate.
  • The expected uplift in telecom ARPU from migration to fiber is plateauing, and future growth in this area will be limited by market saturation and cheaper, entry-level internet-only offers, putting pressure on recurring revenue and raising the risk of lower net margins in the medium term.

Valuation

How have all the factors above been brought together to estimate a fair value?
  • The analysts have a consensus price target of €41.3 for Bouygues based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €52.0, and the most bearish reporting a price target of just €35.0.
  • In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €59.1 billion, earnings will come to €1.4 billion, and it would be trading on a PE ratio of 16.2x, assuming you use a discount rate of 10.7%.
  • Given the current share price of €35.64, the analyst price target of €41.3 is 13.7% higher.
  • We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

How well do narratives help inform your perspective?

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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