Last Update 10 Jan 26

Fair value Decreased 1.68%

TEP: Public Sector Framework Wins Will Support Future Re Rating Potential

Analysts have trimmed their fair value estimate for Teleperformance from about €105.40 to roughly €103.63, reflecting a reset in expectations that is in line with the recent cut in the Street price target to €70 from €105.

Analyst Commentary

Recent commentary points to a reset in expectations around Teleperformance, with the cut in fair value estimates and the Street price target aligning more closely with each other. For you as an investor, the key takeaway is that analysts now see a narrower gap between what they think the shares are worth and where the market is willing to price them.

Bullish Takeaways

Bullish analysts see the trimmed fair value, at about €103.63, as still comfortably above the latest €70 price target. This suggests they view the long term earning power of the business as higher than what near term sentiment implies.
The decision to keep ratings such as Hold alongside lower targets signals that some analysts view current pressures as reflected in expectations, rather than a fundamental breakdown in the company’s ability to execute.
The adjustment in targets can be read as a reset of the bar for future performance. This may give the company more room to positively surprise on execution or capital allocation if it meets or modestly exceeds current assumptions.
For valuation focused investors, the gap between the fair value estimate and the Street target may be interpreted as a cushion if Teleperformance can deliver steady operational performance against these recalibrated benchmarks.

Bearish Takeaways

Bearish analysts are signaling reduced confidence in the company’s near term growth and execution by lowering price targets from €105 to €70. This compresses the implied upside they are willing to underwrite.
The cut in targets, while maintaining ratings like Hold, suggests that some analysts see limited catalysts in the short term that would justify higher valuation multiples or stronger growth assumptions.
The reset in expectations highlights that the margin for error on future results is thinner, with less room for operational missteps before valuations could come under further pressure.
For cautious investors, the alignment of lower Street targets with the reduced fair value estimate may indicate that risk and reward are more evenly balanced, rather than skewed in favor of aggressive growth assumptions.

What's in the News

Teleperformance updated its 2025 earnings guidance and now expects Group like for like revenue growth between 1.0% and 2.0%, compared with the earlier range of 2% to 4% (Corporate Guidance).
The company was awarded a place on the UK Crown Commercial Services MYR 6,295 framework for both Lot 1 (Citizen Experience) and Lot 2 (Business Services), expanding its role in public sector citizen and business services (Client Announcement).
Teleperformance remains the largest supplier on Lot 1 by contract value and now extends its offering into Lot 2, covering back office areas such as HR, financial administration, payroll and procurement for government and public sector departments (Client Announcement).

Valuation Changes

Fair Value Estimate was adjusted slightly from €105.40 to €103.63 per share, reflecting a modest reset in the valuation model inputs.
The Discount Rate was revised marginally from 9.54% to 9.50%, indicating only a small change in the assumed risk and return profile used in the analysis.
Revenue Growth was updated from 1.68% to 1.66%, a very small tweak to the expected pace of top line expansion in the model.
The Net Profit Margin was adjusted fractionally from 6.33% to 6.33%, indicating a largely unchanged view of underlying profitability.
Future P/E moved modestly from 11.50x to 11.30x, pointing to a slightly lower valuation multiple being applied to expected earnings.

Teleperformance leverages AI, automation, and geographic diversification to drive revenue growth, expand margins, and reduce reliance on slow-growth markets.
Regulatory complexities and temporary headwinds in specialized services position the company to gain market share and rebound earnings as global demand stabilizes.
Persistent contract losses, demand softness, currency headwinds, and rising investment needs threaten revenue growth, margin stability, and competitive positioning amid rapid industry transformation.

Catalysts

About Teleperformance

Operates as a digital business services company in France and internationally.What are the underlying business or industry changes driving this perspective?

The accelerating adoption of AI and digitization is expected to increase enterprise demand for outsourced, omnichannel customer experience solutions; Teleperformance has demonstrated strong momentum in EMEA/APAC core services (nearly 6% growth in Q2), suggesting it is well-positioned to capture wallet-share as clients seek scalable, tech-enabled engagement, likely supporting future revenue growth.
Despite prevailing market fears about automation replacing BPO providers, the company has shown that integration of advanced AI and automation (e.g., 250+ AI projects deployed, operational use of Anna AI in recruitment) is expanding the value chain into higher-value, complex services where human oversight is still crucial-these transformations are anticipated to drive margin expansion and support sustainable earnings growth.
Teleperformance's ongoing geographic diversification, especially successful expansion in emerging and nearshore markets like Africa, Egypt, India, and LATAM, is opening new high-growth revenue streams and mitigating overexposure to slower-growing mature markets, supporting both top-line and margin stability.
The current headwinds in Specialized Services (notably U.S. volume softness and a large contract loss) are largely viewed as temporary, linked to macro/political issues rather than systemic/structural decline; the operational recovery, efficiency measures, and strong historical margins in these business lines provide potential for earnings rebound once demand normalizes.
Increasing regulatory complexity is expected to push global enterprises toward large-scale, compliant partners like Teleperformance; as a global leader with deep investment in compliance and security, the company is likely to gain market share from smaller competitors, supporting long-term revenue and net margin improvement.

Teleperformance Earnings and Revenue Growth

Teleperformance Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Teleperformance's revenue will grow by 2.4% annually over the next 3 years.
Analysts assume that profit margins will increase from 4.7% today to 6.9% in 3 years time.
Analysts expect earnings to reach €766.6 million (and earnings per share of €13.7) by about September 2028, up from €481.0 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as €683.7 million.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 11.4x on those 2028 earnings, up from 7.7x today. This future PE is lower than the current PE for the GB Professional Services industry at 13.7x.
Analysts expect the number of shares outstanding to decline by 0.62% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 9.18%, as per the Simply Wall St company report.

Teleperformance Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Persistent revenue decline and heightened volatility in Specialized Services, notably due to the loss of major contracts (e.g., TLS/UK visa) and prolonged demand softness in the U.S. LanguageLine business, signal overexposure to maturing or unstable markets, directly threatening future revenue growth and margin stability.
Significant foreign exchange headwinds, with all operating currencies depreciating against the euro for the first time in the company's history, have already compressed reported EBITDA margins and present ongoing risk to future earnings and reported profitability if currency trends persist.
Uncertain and potentially structural weakness in U.S. demand for LanguageLine's interpretation services, exacerbated by the political environment, results in unpredictable customer volumes, which could drive permanent stagnation or contraction in revenue and maintain pressure on margins in a key business line.
Increased investment requirements (AI, acquisitions, cloud, integration expenses) and front-loaded cash outflows have weakened free cash flow generation and led to delays in deleveraging, raising concerns that ongoing OpEx and CapEx needs could pressure net cash flow and limit financial flexibility.
Ongoing industry-wide risks-including rapid AI-driven automation, intensifying global pricing pressure, and regulatory uncertainty-could further erode Teleperformance's competitive advantage, compress gross margins, and reduce return on invested capital unless the company accelerates its pivot to higher-value, technology-enabled services.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of €117.733 for Teleperformance 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 €195.0, and the most bearish reporting a price target of just €91.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €11.1 billion, earnings will come to €766.6 million, and it would be trading on a PE ratio of 11.4x, assuming you use a discount rate of 9.2%.
Given the current share price of €64.02, the analyst price target of €117.73 is 45.6% 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.

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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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