Sodexo: Morgan Stanley no longer a buyer.
(CercleFinance.com) - In a research report entitled "no summer picnic," Morgan Stanley has downgraded its rating on the Sodexo stock, from "overweight" to "equal-weight".
It has also reduced its target price for the share from 128 euros to 115 euros (-10.1%).
Analysts discuss the disappointing quarterly sales that were recently announced by the group: organic growth in Q3 2016/17 was limited to 1.4%, down from its level in Q2 (1.7%), which is mainly due to the Health and Education divisions in the US. In addition, the group has issued a warning on its annual growth.
These are all factors, which, push Morgan Stanley to say, "Sodexo's Q3 sales miss raises concerns about its internal reporting, recent reorganisation, margin trade-off, and even strategy," in its research report. Indeed, Morgan Stanley stresses that in April, management seemed confident about the second half of 2016/17. How did it fail to see the weakening of trends in the US coming? In addition, Morgan Stanley is concerned that, in light of the latest trends, growth targets for the next fiscal year are over-ambitious.
Copyright (c) 2017 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.
It has also reduced its target price for the share from 128 euros to 115 euros (-10.1%).
Analysts discuss the disappointing quarterly sales that were recently announced by the group: organic growth in Q3 2016/17 was limited to 1.4%, down from its level in Q2 (1.7%), which is mainly due to the Health and Education divisions in the US. In addition, the group has issued a warning on its annual growth.
These are all factors, which, push Morgan Stanley to say, "Sodexo's Q3 sales miss raises concerns about its internal reporting, recent reorganisation, margin trade-off, and even strategy," in its research report. Indeed, Morgan Stanley stresses that in April, management seemed confident about the second half of 2016/17. How did it fail to see the weakening of trends in the US coming? In addition, Morgan Stanley is concerned that, in light of the latest trends, growth targets for the next fiscal year are over-ambitious.
Copyright (c) 2017 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.