Morgan Stanley has revised its price target for Sodexo (SDXAY, Financial), lowering it from EUR 68 to EUR 64. The firm maintains its Equal Weight rating on the shares, reflecting a balanced outlook on the company's future performance. This adjustment comes as part of an ongoing assessment of Sodexo's market position and potential growth prospects.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 1 analysts, the average target price for Sodexo (SDXAY, Financial) is $93.62 with a high estimate of $93.62 and a low estimate of $93.62. The average target implies an upside of 643.89% from the current price of $12.59. More detailed estimate data can be found on the Sodexo (SDXAY) Forecast page.
Based on the consensus recommendation from 1 brokerage firms, Sodexo's (SDXAY, Financial) average brokerage recommendation is currently 1.0, indicating "Buy" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Sodexo (SDXAY, Financial) in one year is $19.01, suggesting a upside of 51.05% from the current price of $12.585. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Sodexo (SDXAY) Summary page.
Key Business Developments
Release Date: April 04, 2025
- Revenue: EUR12.5 billion, up 3.1% with organic revenue growth of 3.5%.
- Organic Growth Guidance: Revised to 3% to 4% for fiscal year '25, down from initial 5.5% to 6.5%.
- Operating Profit: Increased by 6.4%, with a 10 basis point margin improvement to 5.2%.
- Net Profit: EUR434 million, down 12.5% compared to last year.
- Underlying Net Profit: EUR450 million, up 5.4%.
- Free Cash Flow: Negative EUR234 million due to seasonality, working capital requirements, and exceptional tax outflow.
- Net Debt: Increased by EUR850 million to EUR3.4 billion.
- Net Debt-to-EBITDA Ratio: 2.3 times, unchanged from H1 fiscal year '24.
- Retention Rate: 93.9% with a target of 94% to 94.5% for the full year.
- Development Rate: 7.3% with a target of 7% to 8% for the full year.
- Cost Savings: EUR10 million from Global Business Services project.
- Tax Rate: Projected at 23% to 24% for the year.
- CapEx: EUR256 million or 2.1% of revenue, with a target of around 2.5% for the full year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sodexo (SDXAY, Financial) secured over EUR1 billion in new contracts during the first half, indicating strong business development momentum.
- The company achieved a 3.5% organic revenue growth in the first half, with food services outperforming at 4.5% organic growth.
- Sodexo (SDXAY) maintained a retention rate of 93.9%, with a target to reach between 94% and 94.5% for the full year.
- The company is making progress in cost management, with its Global Business Services project delivering around EUR10 million in savings this year.
- Sodexo (SDXAY) reported a 6.4% increase in underlying operating profit, with a 10 basis point margin improvement.
Negative Points
- Sodexo (SDXAY) revised its full-year guidance due to a lower-than-expected pace of growth, particularly in North America.
- The company faced delays in the ramp-up of new healthcare contracts, contributing to a 90 basis points drag on growth.
- Net new contributions in North America were weaker than expected, with some large contracts only starting to contribute in fiscal year '26.
- The education segment experienced a 60 basis points impact due to lower-than-expected volume growth and weather-related school closures.
- Sodexo (SDXAY) faced retention pressure in corporate services, contributing to a 50 basis points impact in North America.
