Technology

Report by Iron Blue Financials

Following publication of its FY25 universal registration document, Iron Blue increase their CAP score +3pts to 30/60 (newly top decile and fertile grounds for shorting). This higher score reflects: 1) Increased stripped out costs (both restructuring and share payments). 2) Higher cost capitalisations. 3) Iron Blue’s conclusion that CAP may have fair value adjusted downwards the software on WNS’s balance sheet. 4) The dropping of organic growth as an alternative performance measure in a year of material acquisition revenue contribution. They also note that in FY26 Grant Thornton will replace PwC as one of CAP’s auditors - PwC had been in place for nearly three decades.

Technology

Report by GR20 Research

Capgemini’s investment in the OpenAI Deployment Company reflects growing demand for enterprise AI deployment services, as organisations look to scale adoption through consulting, engineering and transformation support. Rather than posing a threat to firms such as Capgemini, Accenture and Infosys, the initiative highlights OpenAI’s reliance on consulting partners for sector expertise and large-scale implementation. This should create further opportunities for AI-enabled transformation services as enterprises move from experimentation to deployment.

Report by AIR Capital

Despite rising geopolitical risk, European corporate guidance has yet to reflect the potential economic impact. In AIR’s recent management meetings, discussion focused almost entirely on AI, with little attention paid to the Iran conflict despite surging energy prices and supply-chain stress that historically drive earnings revisions. The combination of unpriced macro risk and AI-driven sectoral disruption creates a credible basis for expecting a meaningful wave of 2026 earnings guidance revisions across European equities in the coming weeks. And the performance gap between the companies on the right side of these structural shifts and those on the wrong side will broaden. Stock winners include AI infrastructure beneficiaries such as Arm, Elmos, Aixtron and STM, alongside defence exposure at Exosens and Indra Sistemas. Euronext and Auto1 are also seen as largely insulated. Under pressure are Stroeer, Freenet and SES. In IT services, the sector is splitting between “The Conquerors” (Accenture, Cognizant, Reply) and “The Endangered” (Capgemini, Atos, Sage, Dassault Systemes, SAP).

Technology

Report by GR20 Research

CAP's share price has shown weakness since the announcement of a below-consensus guidance for FY25, highlighting concerns about its underperformance compared to peers and the delayed recovery of the IT services industry. Its revenue mix, with significant exposure to manufacturing in Europe, limits its growth compared to offshore competitors like TCS, Infosys and Cognizant, which are benefitting from recovery in financial services. Despite AI creating high expectations, its impact on bookings remains limited, causing delays in decision-making; however, AI presents significant opportunities in IT services as it drives demand for business transformation.

Technology

Report by Willis Welby

Willis Welby wonders if the ebb and flow of revisions might be obscuring the bigger picture at CAP - the Altran deal was a master stroke and on top of that it feels like there is a secular change in margins that will stick. Maybe any material slowdown will be an issue, but the implied to Y3 EBITM ratio of 49 already seems consistent with that happening. Willis Welby thinks the market is fighting historic battles and does not find it hard to envisage CAP's share price back at its late 2021 peaks of €220 (35% upside).

Technology

Report by Woozle Research

Double downgrade to Short / Sell - 50% of respondents interviewed* reported softening demand with pessimistic trading outlooks. Spend levels increased by 6% YoY, trailing consensus estimates of 10.1% YoY in organic revenue growth for 4Q22. Some CAP clients decided to shift more work to Accenture and a few were impacted by budget cuts and IT spending reductions this quarter. Reduced spending was particularly prominent among big enterprise retailers.

*Woozle conducted interviews with 22 CTOs and IT service procurement specialists. Regional split: 56% from Europe, 11% North America and 33% Asia.

Report by Copley Fund Research

Global equity managers are positioned at their highest ever overweight in French equities - average holding weights have moved towards the top end of the 8-year range at 4.16%, pushing net overweights to a record +1.48% above the iShares ACWI ETF benchmark. Out of the 365 global funds in Copley’s analysis, 64.4% are overweight France compared to the ACWI index. Aggressive Growth and Yield managers have led the charge. On a stock level, LVMH is the most widely held name, while Sanofi and Capgemini have benefited from fund rotation this year.