Overview#
Morgan Stanley has made significant changes to its outlook on Teleperformance, a French business services company. The brokerage downgraded its rating and more than halved its price target, citing management upheaval and declining business performance.
Downgrade Details#
On Tuesday, Morgan Stanley lowered its rating on Teleperformance from "overweight" to "equal-weight" and reduced its price target from €112 to €53. This adjustment comes as Teleperformance shares closed at €49.51, giving the company a market capitalization of approximately €2.93 billion. Analysts acknowledged their earlier misjudgment, stating that the company's valuation did not stabilize despite strong free cash flow (FCF).
Management Changes#
The downgrade follows a major shake-up in Teleperformance's management. Chief Executive Daniel Julien has stepped down, with deputy-CEO Thomas Mackenbrock transitioning to a board position and CFO Olivier Rigaudy also leaving. Jorge Amar has taken over as CEO as of March 15. Morgan Stanley plans to wait for a strategic update from Amar before reassessing its outlook.
Business Performance#
Teleperformance has faced challenges, with organic growth turning negative in the fourth quarter of 2025, marking a decline of 0.6%. This is the first negative growth since late 2023. The company’s LanguageLine Solutions business has struggled due to changes in U.S. immigration policy, which reduced demand for interpretation services. Additionally, losing a UK visa contract cost the company around €20 million in revenue, with further losses expected in early 2026. Morgan Stanley has adjusted its 2026 organic growth forecast downward by 60 basis points, now estimating revenues at €10.06 billion.
Future Outlook#
Despite the challenges, a sum-of-the-parts analysis indicates that Teleperformance could see more than a 40% increase in equity value if it pursues asset sales. However, Morgan Stanley remains cautious, stating that there are limited catalysts for re-rating the company before the second half of 2026.