Strong H1 results confirm a change in status Sopra Steria''s H1 results reported last week confirmed a change in status for the company: the 12% LFL growth in Q2 in the UK showed it is now gaining share in the country, while the CEO''s indication of 6% price growth YOY in France in H1 illustrates his strategy of focusing on higher-value projects is working. As a result, and despite an IT services market that the group''s management sees slowing, the company grew +7% LFL in Q2, outpacing Capgemini at +4.7%. Confident message on c. 10% adjusted EBIT margin in 2024 On the road with us in Paris post-results, management reiterated that group margin should expand HoH in H2: although the price vs. wage inflation delta should narrow and margin in the UK may come down HoH, higher license sales at Sopra Banking Software and better margins in other divisions should help. We model 9.9% margin in H2, and 9.4% for the FY 2023. For FY 24, CEO remains confident the group can achieve c. 10% margin, with all divisions expected to improve YOY: pricing should remain a driver, and so will consulting, synergies with CS, real estate rationalisation, and the continued streamlining of RandD efforts at Sopra Banking Software. Changes to our estimates We have increased our LFL growth estimate for FY 2023 to +6.4% from +4.8%, and adjusted EBIT margin to 9.4% from 9.1%. For next year, we cautiously expect +3.3% LFL growth and 9.8% margin, assuming the European macro continues to deteriorate. This lifts our adjusted EPS over 2023-24E by 6-7%. Neutral maintained, TP up to EUR204 We think H1 results confirm Sopra Steria''s change in status, and we like CEO Cyril Marlarge''s focus on delivering higher value to customers to drive better profitability in the midterm. Valuation is undemanding today, but midcap IT services names can go to double-digit FCF yield in more severe downturns: we thus think better entry points may materialise in the coming quarters. We keep our Neutral rating,...