On Friday, Bernstein analysts maintained a positive stance on Compass Group (LON:CPG:LN) (OTC: CMPGY), reiterating their Outperform rating and a price target of £2,960.00. The firm's analysis pointed to the ongoing acceleration of the outsourcing trend, which is expected to bolster new business in the catering sector throughout 2025.
Bernstein's outlook for Compass Group is bolstered by the strength of the US economy, which is anticipated to benefit companies with significant US market involvement. Compass, with its substantial and high-quality US market presence, is favored over its competitor Sodexo (EPA:EXHO). Analysts predict that Compass will achieve high-single digit growth over the next two to three years.
The firm also noted Compass Group's strategic focus on internal investment for future growth, as evidenced by large-scale mergers and acquisitions initiated in the fiscal years 2024 and 2025. While Compass is currently prioritizing reinvestment over returning cash to shareholders, Bernstein analysts do not rule out the possibility of a share buyback program being announced later in 2025.
In terms of financial performance, Compass is expected to see a 10% growth in earnings before interest and taxes (EBIT). With a forecasted enterprise value to EBIT multiple of 17 times for the fiscal year 2025, Bernstein analysts believe there is still potential for an upside in Compass Group's stock value. The robust outlook is based on the company's strategic moves and favorable market conditions, which are likely to drive growth in the near term.
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