Solid Q3 performance At EUR1,463m, Lagardere Q3 revenues came ahead of consensus expectations with a beat in both Publishing and Travel Retail. On a 2y stack, Publishing is up 4% while Travel Retail is down 39%. But management commented that Travel Retail revenues had seen an improvement in the last two weeks of October from -39% every month in Q3 and early October to -35% more recently (like for like vs 2019). Management expects corporate travel to improve but not return to pre-pandemic levels. With corporate travel accounting for an estimated 20-30% of Lagardere Travel Retail revenues and given recent announcement of a reopening of US-European routes, management remained confident on a further gradual recovery. The operating loss flow-through to guidance (based on 2019 numbers) has been improved from 15-20% previously to 12-15% now, in line with our forecasts. Publishing margin guidance well ahead of consensus Management also guided for close to 12% EBITA margin in Publishing (vs. cons. at 10%), a level not seen in over 10 years. A solid top-line performance coupled with cost efficiency gains is driving up the profitability of this division. While margins should benefit from synergies from the Workman Publishing acquisition, management sounded a cautious note with comments on FY22 margins below 12%. Publishing drives earnings upgrades We have increased our EBITA in Publishing by 15% and 11% for 2021 and 2022 (Workman accounts for less than one third of the upgrade in 2022). This drives the vast majority of our earnings upgrade. Vivendi bid remains the key share price driver Lagardere currently trades at a 6% discount to Vivendi''s mandatory offer, reflecting regulatory uncertainty. But with Publishing beating expectations and Travel Retail gradual recovery on track, we believe the question of a revised bid could soon come on the table.