Veolia Releases Q1 Results in Line With Expectations, Confirms 2022 Guidance, Shares Undervalued

We maintain our fair value estimate of EUR 34.20 after no-moat Veolia released first-quarter results in line with consensus it polled at the EBITDA level and confirmed its 2022 guidance. Shares are significantly undervalued after the broad market selloff and as investors get the jitters about the impact of the economic slowdown on the group. Yet, activities which can be deemed cyclical, that is commercial and industrial waste, account for only 17% of the group's turnover. On the other hand, the current environment offers significant tailwinds like positive pricing thanks to indexation of most contracts to inflation and positive foreign-exchange effects. Last, synergies from the integration of Suez and permanent cost-cutting efforts will support earnings in 2022 and beyond.