Sodexo: Credit Suisse downgrades to sell
(CercleFinance.com) - Citing risks to growth and investments, Credit Suisse has downgraded its rating on Sodexo shares from "neutral" to "underperform".
Analysts have also reduced their corresponding target price from 105 euros to 100 euros.
On 11 January the French group will publish its Q1 2017/2018 sales figures. Credit Suisse believes that "Sodexo's strategic focus on Facilities Management that has led to core food organic growth of 1% implying zero new contracts wins." On the contrary, this rate reaches 5% at Compass, one of Sodexo's main competitors.
In addition, Credit Suisse believes that Sodexo will have to increase the amount it allocates to capex from 1.5% (over the last five years) to 1.8% of its revenues. Even though its results will benefit from cuts in corporate taxation in the US.
Finally, with Sodexo's EPS growth reaching an average of 5.2% p.a. by 2020 and trading at a P/E of around 20x, Credit Suisse considers the share as expensive. From this point of view, the group's peers Carnival and IHG are considered as more attractive, which moreover the broker recommends investors buy ("outperform" ratings).
Copyright (c) 2018 CercleFinance.com. All rights reserved.
The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.
Analysts have also reduced their corresponding target price from 105 euros to 100 euros.
On 11 January the French group will publish its Q1 2017/2018 sales figures. Credit Suisse believes that "Sodexo's strategic focus on Facilities Management that has led to core food organic growth of 1% implying zero new contracts wins." On the contrary, this rate reaches 5% at Compass, one of Sodexo's main competitors.
In addition, Credit Suisse believes that Sodexo will have to increase the amount it allocates to capex from 1.5% (over the last five years) to 1.8% of its revenues. Even though its results will benefit from cuts in corporate taxation in the US.
Finally, with Sodexo's EPS growth reaching an average of 5.2% p.a. by 2020 and trading at a P/E of around 20x, Credit Suisse considers the share as expensive. From this point of view, the group's peers Carnival and IHG are considered as more attractive, which moreover the broker recommends investors buy ("outperform" ratings).
Copyright (c) 2018 CercleFinance.com. All rights reserved.
The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.