Investing.com -- Morgan Stanley has highlighted a set of top picks in the European business services sector, maintaining an “Attractive” industry view and backing several companies with “overweight” ratings, citing resilient growth, strong pricing power, and margin expansion potential as key drivers of upside.
Elis
Elis stands out for its consistent, above-GDP growth profile supported by a dense operational network and long-term customer relationships. The company’s ability to maintain pricing power and deliver best-in-class profitability underpins the broker’s positive stance. Additional upside is expected from market share gains, efficiency improvements, and bolt-on acquisitions, alongside continued deleveraging that enhances capital allocation flexibility.
ISS
ISS is viewed favorably due to improving commercial momentum and steady organic growth expectations above 5%. The company benefits from pricing tailwinds and disciplined cost management, which help protect margins and cash flow. Morgan Stanley also sees potential shareholder returns through buybacks, while noting that operational risks such as regional turnarounds are becoming less of a concern.
Ferguson
Ferguson plc is considered a high-quality operator with strong market positioning and scale advantages. Despite near-term softness in residential markets, the company is expected to deliver steady growth driven by pricing, productivity gains, and increasing own-brand penetration. Its exposure to repair, maintenance, and improvement (RMI) activity provides resilience, while a strong balance sheet offers scope for acquisitions and shareholder returns.
Verisure
Verisure is highlighted for its subscription-based model, which delivers highly predictable and recurring revenues. The company combines strong subscriber growth with low attrition, resulting in one of the most stable growth profiles in the sector. Morgan Stanley sees significant long-term upside from expansion in underpenetrated markets, along with continued margin improvement and strong cash flow generation.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.