Sodexo: Barclays downgrades stock

(CercleFinance.com) - Barclays has downgraded its rating on the Sodexo share from "equal weight" to "underweight," while cutting its target price by 13% to 96 euros, after the broker cut its EPS estimates for the services group.


The broker says that it sees risks in the consensus' projections in terms of margin growth (up 40 basis points by 2021) and announced a new 2021 EPS estimate of 5.53 euros, 8% below the consensus.

"Sodexo may appear 'cheap' relative to Compass, trading at a c20% EV/EBITDA discount but we think the valuation differential is more than justified when we consider the inferior organic growth rates," the broker says.


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