UPDATE: Societe Generale Initiates Veolia Environnement at Buy on Turnaround, M&A Potential

Societe Generale initiated coverage on Veolia Environnement

with a Buy rating. Societe Generale noted, "The group is on track to meet its net debt reduction target, although we view balance sheet credit metrics as relatively tight. Trading on a 2014e P/E of 9.6x, EV/Sales of 0.5x and Price/Book of 0.6x, the current valuation does not discount any material improvement in either waste market conditions or the cost reduction opportunity (e.g. our forecasts assume only half of the targeted €300m net cost reduction target is achieved during 2014-2015). While merger discussions with Suez Environnement are no longer ongoing, the shares also do not discount any form of M&A premium." Veolia Environnement closed at $9.80 on Monday.