Key Takeaways:
- Teleperformance demonstrates resilient core services growth with 3.5% like-for-like expansion in Q2, despite specialized services headwinds from U.S. market volatility.
- TEP stock could reach €96/share by December 2029 based on conservative valuation assumptions, representing 53% total return with 11% annualized gains over 4.2 years.
- The company’s TP.ai FAB platform integrates AI orchestration with human expertise across 1,500 client implementations, positioning Teleperformance as an industry leader in AI-enabled business services.
- Management projects a cumulative free cash flow of € 3 billion through 2028, with 50% earmarked for shareholder returns
Teleperformance (TEP) stands at a pivotal transformation point as the global customer experience leader is systematically integrating AI across its operations while maintaining the human touch that defines quality service delivery.
Despite near-term headwinds in specialized services, the company’s core business demonstrates accelerating momentum as clients embrace hybrid AI-human solutions.
Teleperformance serves enterprises globally through comprehensive customer experience management, business process services, and specialized solutions spanning interpretation, visa processing, recruitment, and health advocacy across 100 countries.
Core offerings include AI-enabled customer care, back-office BPO, data annotation services, and vertical-specific solutions for banking, insurance, retail, and healthcare, delivered through the company’s proprietary TP.ai FAB platform, which combines agentic AI with human orchestration.
The business services leader delivered first-half 2025 revenues exceeding €5.1 billion despite foreign exchange headwinds, with core services accelerating from 2.3% growth in Q1 to 3.5% in Q2 on a like-for-like basis.
Teleperformance demonstrates operational discipline under CEO Daniel Julien’s 47-year leadership and the management team led by Deputy CEOs Thomas Mackenbrock and Olivier Rigaudy. The company maintains profitability while investing approximately €1 billion annually in R&D and AI transformation.
Down almost 80% from all-time highs, TEP stock trades at a compelling valuation and is a top investment right now.
Here’s why Teleperformance stock could provide attractive returns through 2029 as it capitalizes on AI transformation while scaling its comprehensive service platform across expanding client relationships.
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What the Model Says for Teleperformance Stock
We analyzed the upside potential for Teleperformance stock using valuation assumptions based on AI-driven transformation capabilities and market positioning across customer experience management and adjacent high-growth services.
Analysts recognize opportunity in TEP stock given management’s proven execution track record, global scale advantages, and systematic approach to embedding AI while maintaining differentiated human expertise across complex enterprise environments.
The company’s multi-pronged growth strategy provides diversified revenue streams.
- Core services benefit from AI enablement and vertical expansion.
- Data services address rapidly growing AI training needs.
- Technology consulting captures digital transformation spend.
This comprehensive approach positions Teleperformance to accelerate growth beyond current mid-single-digit targets.
Based on estimates of 2% annual revenue growth (conservative near-term view), 14.6% operating margins, and a normalized P/E valuation multiple of 4.4x, the model projects TEP stock could rise from €63/share to €81/share.
That would represent a 29% total return, or 12% annualized return over the next 2.2 years.
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Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for TEP stock:
1. Revenue Growth: 2%
Teleperformance delivered 23% revenue growth over the past year, driven by the Majorel acquisition and strong organic momentum in core services before encountering specialized services headwinds in early 2025.
Growth drivers include accelerating core services momentum (3.5% Q2 growth versus 2.3% Q1), strong EMEA/APAC performance at nearly 6% like-for-like growth, expanding back-office BPO capabilities, and emerging AI data services opportunities.
Management guides for 4-6% mid-single-digit growth by 2028, with explicit commentary that 2026 and 2027 will show progressive improvement from 2025’s lower-end guidance of 2-4% like-for-like.
Teleperformance completed over 250 AI implementations in the first half of 2025, demonstrating tangible progress in commercializing its TP.ai FAB platform.
We used a conservative 2% near-term forecast reflecting specialized services challenges (particularly LanguageLine’s U.S. market volatility) offset by accelerating core services.
Management’s confidence in reaching mid-single-digit growth suggests upside to conservative projections as AI solutions gain traction and specialized services normalize.
2. Operating Margins: 15%
First-half 2025 EBITDA margins of 13.9% (constant FX basis) matched the prior year despite specialized services margin pressure and AI investment spending, demonstrating operational resilience.
Management targets 15.5% operating margins by 2028 through three priority initiatives: completing Majorel synergy implementation (particularly France reorganization starting 2026), advancing specialized services integration under new CEO Juan Carlos Hincapie, and leveraging AI to simplify organizational structure and reduce operational costs.
The company is committed to maintaining approximately €1 billion annual R&D spending while offsetting AI investments through efficiency gains.
Core services improved margins 10 basis points despite FX headwinds, while specialized services margin compression stemmed primarily from LanguageLine’s temporary demand softness.
CFO Olivier Rigaudy emphasized the company’s track record: “We are totally committed in these 3 plans…we are absolutely convinced that we will be able to deleverage our company and to improve our SG&A and direct costs.”
3. Exit P/E Multiple: 4.4x
TEP stock trades at 4.4x current NTM P/E, below historical averages of 5.5x over one year, 8.3x over three years, and 15.9x over five years, reflecting market skepticism about AI disruption and near-term specialized services challenges.
We maintain this conservative 4.4x exit multiple, recognizing execution risks in AI transformation, competitive dynamics in business services, and the multi-year nature of margin expansion initiatives.
However, several factors support potential multiple expansion.
- The company generates substantial free cash flow (€1 billion annually, targeting €3 billion cumulative through 2028).
- Management is committed to returning 50% of free cash flow to shareholders (€1.5 billion over three years).
- The balance sheet is expected to strengthen to 1.2x net debt/EBITDA by 2028, the strongest in the sector.
Long-term competitive advantages from global scale (100 countries, 500,000+ employees), deep client relationships (average 13-year tenure with 1,500+ core clients), and systematic AI integration through TP.ai FAB should support reasonable valuations as transformation benefits materialize and growth accelerates toward mid-single-digit targets.
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What Happens If Things Go Better or Worse?
Different scenarios for TEP stock through 2030 show varied outcomes based on AI transformation execution and market conditions: (these are estimates, not guaranteed returns):
- Low Case: Specialized services remain challenged, AI benefits slower than expected → 6% annual returns
- Mid Case: Progressive growth acceleration, margin expansion on track → 11% annual returns
- High Case: Strong AI monetization, specialized services recovery → 14% annual returns
Even in the conservative scenario, Teleperformance offers attractive returns supported by an asset-light model generating substantial cash flow, market-leading scale, and proven management navigating technology transitions over 40+ years.
The upside case could deliver exceptional performance if the company successfully scales TP.ai FAB adoption across the client base, accelerates data services growth (targeting 30% annual market expansion), and normalizes specialized services performance as U.S. market conditions stabilize.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!