Guidance warning season
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).
Edition: 232
- 20 March, 2026
Capgemini (CAP FP) France
Technology
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.
Edition: 206
- 07 March, 2025
Capgemini (CAP FP) France
Technology
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).
Edition: 159
- 28 April, 2023
Capgemini (CAP FP) France
Technology
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.
Edition: 151
- 06 January, 2023
France: Europe's high conviction holding
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.
Edition: 141
- 05 August, 2022