Analyst Toni Kaplan from Morgan Stanley maintained a Hold rating on ARAMARK Holdings (ARMK – Research Report) and keeping the price target at $43.00.
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Toni Kaplan’s rating is based on a combination of factors surrounding ARAMARK Holdings’ recent financial performance and market conditions. The company reported a slower-than-expected organic growth rate of 4.7% for the first quarter of fiscal year 2025, which was below the Morgan Stanley estimate of 6.6%. Despite this deceleration, ARAMARK maintained its full-year guidance, anticipating an acceleration in revenue growth during the second half of the year, primarily driven by new contract wins and high retention rates.
Additionally, ARAMARK’s operating income margins were in line with expectations, showing a mixed performance across different regions. The U.S. beat margin estimates, while international operations fell short. In a favorable inflation environment, ARAMARK’s strategic share repurchase program and projected net leverage reduction provide some financial stability. With a trading multiple positioned between its peers, Compass and Sodexo, Kaplan finds the valuation fair, supporting a Hold rating and maintaining a price target of $43.
Based on the recent corporate insider activity of 118 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of ARMK in relation to earlier this year.