Bureau Veritas: Raising Moat Rating to Wide From Narrow; Increasing Fair Value Estimate by 33%

We are raising Bureau Veritas' moat to wide from narrow due to its intangible assets and switching costs after transferring coverage to a new analyst. Bureau Veritas’ intangible asset advantage comes from its vast suite of over 1,000 authorizations, a portfolio that requires a sizable monetary and time investment, and provides a significant barrier to entry. The company’s switching cost advantage is underpinned by its global scale, integration into clients' processes, and high risk of failure. The industry is highly fragmented with only four global firms accompanied by a slew of regional and local companies. This is an advantage for a large player such as Bureau Veritas, especially with multinational clients. Further, we are increasing our fair value estimate by 33% to EUR 40 per share due to higher revenue growth and margin expectations.