Sodexo: Contact: On the starting block
BUY, Fair Value EUR75 (+10%)
Since our upgrade, the stock has underperformed the Euro Stoxx 600 by nearly 2% reflecting the sluggish performances expected for FY2012/13 ending 31st August. Actions implemented in H1 and reinforced in H2 as well as the group’s fundamentals should help it to restore a more robust pace of growth bearing in mind that the group’s target is to reach a 6.3% EBIT margin by the end of FY2014/15 (5.1% for 2012/13e). Nevertheless, like the consensus, we still have a more cautious stance taking into account that the EBIT margin will decrease in FY2012/13 and the improvement to reach the group’s goal would occur primarily in FY2014-15.
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