D.he technology-oriented companies are global winners from the pandemic crisis. This is now also reflected in structural changes on the stock exchange – and not only in classic tech eldorados like the Nasdaq in New York, but also in Europe. Because the weight of tech companies in the indices is increasing. On the one hand, this is due to the price gains of the companies in the past few months, and on the other hand, because of their entry into the major indices due to the increase in value. The French CAC-40 stock market index is therefore changing its face. For a long time only luxury goods manufacturers, the oil industry and banks dominated the picture. Now there are some interesting technology stocks. The old contrast between the old and the new economy is thus given a new topicality.
The biggest French players and beneficiaries of this trend are Teleperformance and Worldline. Teleperformance describes itself as the world’s largest operator of call centers, which also looks after the entire customer relationships of various companies. On June 22nd, the group with its 330,000 employees in more than 80 countries replaced the French food supplier Sodexo in the CAC-40. While the French benchmark index has lost almost 3 percent of ground since then, Teleperformance’s share has increased by 17 percent to 254 euros. The company is currently worth almost 15 billion euros on the French stock exchange. Some analysts believe that there is still room for improvement. Goldman Sachs recently raised the price target from 305 to 365 euros. Everything that has to do with long-distance relationships is currently enjoying a tailwind. Since the beginning of the year, the Teleperformance share has gained more than a fifth in value. In the CAC-40, only the luxury manufacturer Hermès did better this year.
Valued at a good 38 billion euros
The French tech companies are still a small spot at a bird’s eye view of the index, but it is growing. Depending on the delimitation of the technology industry, analysts now add six percent to a narrow definition – compared to two percent one or two years ago. In addition to Teleperformance, Worldline is another leader in the industry. He is in sixth place in the list of the best performing companies since the beginning of the year. In addition to Hermès and Teleperformance, only the electronics company Schneider Electric, the chip manufacturer STMicroelectronics and the cosmetics company L’Oréal rank ahead of Worldline. The company is an electronic payment systems provider that entered the CAC-40 in March this year, replacing the oil supplier TechnipFMC. Since then, the Worldline share has made a jump of almost 40 percent to 65 euros per share, which means that the company is valued at just under 12 billion euros. The analysts of the brokerage house Jefferies recently renewed their buy recommendation for Worldline and raised the price target from 92 to 110 euros.
Worldline is now worth 5 billion euros more than the former parent company Atos, which is another tech asset in the CAC-40. The IT group made its entry into the CAC-40 three and a half years ago. It shows that not all tech companies have trees that reach the sky. Atos is still trading around 20 percent below the level before the outbreak of the pandemic, around February 2020. In July, the share had almost reached the pre-crisis level again, but then it went downhill. The fear of the force of the second virus wave predominated.
The largest classic French technology stock is the software house Dassault Systems, which is valued at a good 38 billion euros. The share, which was included in the CAC-40 in September 2018, is now trading at around the level at the beginning of the year. Many French technology stocks, however, are still in the middle segment below the CAC-40 due to their small size. A look at the CAC Technology sector index with its forty values is therefore revealing: Today it is slightly above the level at the beginning of the year. After the crash in February and March, it has grown by more than a third.
The tech stocks cannot escape the disenchantment that the second virus wave is spreading on the stock market: the sideways movement of the CAC-40 since the summer is increasingly getting a downward twist. Since October 12 alone, the index has lost 4.5 percent. Tech values, however, offer some glimmers of hope, even if they are generally considered to be volatile. This is also shown by a look at the losers of the year: Société Génerale brings up the rear with a price drop of 59 percent since the beginning of January. Crédit Agricole, BNP Paribas and the insurer Axa also recorded high double-digit losses. Not surprisingly, Airbus, Thales and Safran are among the weakest stocks alongside financials. Greetings from the aviation crisis.