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Sodexo: stock hit by an analyst's downgrade

( - The stock is down sharply this morning (-5%) as Goldman Sachs analysts downgraded their rating on the stock to Sell (vs.

"We are cautious on Sodexo, with our estimates below consensus for the next two years," the broker said.

Goldman Sachs believes that apart from the continuing uncertainty, the current rules of social distancing and changes in consumption will pose significant challenges for the food service industry.

"In the absence of a vaccine we expect that the next two years will remain under pressure from social distancing measures... We are also concerned about the impact to operating leverage due to lower business volumes, and risk of increasing labour intensity from heightened focus on food safety," the broker says.

"The Catering sector is now trading at a c.8% FY22E FCF yield vs. c.4% over the past five years, which we see as excessive".

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