Vivendi (VIVHY) is a French media conglomerate that you may not be familiar with yet, but you will be soon. The company announced today that it is looking at the possibility of splitting itself into 3 distinct entities:
- Public relations and advertising company Havas
- Filmmaker Groupe Canal+
- An investment company for its majority stake in Lagardère Group, a publishing company
This news initially sent shares 7% higher in Thursday’s trading session, but they’ve settled at around a 4% gain on the day.
The stock has taken a dramatic fall from its pandemic high of nearly $42/share, but there’s reason to believe this move could push the company back in the right direction and raise its valuation once more.
The company issued a statement saying that it has endured a “significantly high conglomerate discount, substantially reducing its valuation and thereby limiting its ability to carry out external growth transactions for its subsidiaries”. This came after the distribution and listing of the company’s Universal Music Group subsidiary via IPO in 2021.
Investors have pointed to a lack of synergy between the various components of the business in the past. Even analysts with JP Morgan say that splitting the business would remove that discount that’s held the stock back and push its price as much as 50% higher.
More importantly for French billionaire and early Vivendi investor Vincent Bolloré, this move would allow him to up his stakes in any of the newly formed companies at a discount himself.
Bolloré’s stake in Vivendi earned him a chair on the board back in 2014, which he stepped down from and appointed his son to in 2019. This came after investigations into some sketchy business moves where Bolloré gave PR discounts to politicians in exchange for favorable contracts to run the country’s ports.
All that being said, there are quite a few moving parts within VIVHY right now – should you get a piece of the pie yourself before the company decides to split? We’ve taken a look through the VectorVest stock forecasting software and uncovered 3 things you need to see now.
VIVHY Has Fair Upside Potential and Safety With Good Timing
VectorVest simplifies your trading strategy through a proprietary stock-rating system. It boils down everything you need to know about a stock into 3 ratings: relative value (RV), relative safety (RS), and relative timing (RT).
Each rating sits on a scale of 0.00-2.00 with 1.00 being the average, making interpretation quick and easy. The system saves you time and stress while empowering you to win more trades. But it gets even better.
Because based on the overall VST rating for a given stock, you’re presented with a clear buy, sell, or hold recommendation - at any given time. As for VIVHY, here’s what you need to know:
- Fair Upside Potential: The RV rating compares a stock’s long-term price appreciation potential (based on a 3-year forecast) to AAA corporate bond rates and risk. It offers much better insight than a simple comparison of price to value alone. The RV rating of 1.04 is considered fair for VIVHY. Plus, the stock is undervalued right now. The current value is $12.40.
- Fair Safety: The RS rating is an indicator of risk. It’s based on an analysis of the company’s financial consistency & predictability, debt-to-equity ratio, business longevity, price volatility, sales volume, and other factors. VIVHY is a fairly safe stock, although the RS rating of 0.88 is a bit below the average.
- Good Timing: Here’s what makes VIVHY an enticing opportunity - it has a solid price trend pushing its price higher, as confirmed by the good RT rating of 1.17. This rating is based on the direction, dynamics, and magnitude of the stock’s price movement day over day, week over week, quarter over quarter, and year over year.
The overall VST rating of 1.04 is just above the average and is considered fair. But, it’s enough to earn the stock a BUY recommendation in the VectorVest system today. Learn more with a free stock analysis - don’t miss out on this opportunity!
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VectorVest advocates buying safe, undervalued stocks, rising in price. VIVHY is rallying in today’s trading session after announcing its intentions to potentially split up into 3 distinct entities. The stock has fair upside potential and safety with good timing.
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