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Investing.com - UBS has lowered its price target on Aramark Holdings (NYSE:ARMK) to $45.00 from $46.00 while maintaining a Buy rating ahead of the company’s fourth-quarter earnings report, scheduled for November 18. The food service giant, currently valued at $10.09 billion, trades at a P/E ratio of 28.2x, which InvestingPro analysis suggests is relatively high compared to near-term earnings growth expectations.
The firm cited a "tricky setup" for Aramark’s upcoming financial results, noting higher stakes for fourth-quarter organic growth after the company reiterated expectations of an 8.0%+ underlying exit rate despite revenue shortfalls in recent quarters. Recent data shows modest revenue growth of 4.02%, with gross profit margins at 15.56%, which InvestingPro identifies as a potential concern.
UBS projects 8.0% organic growth for the fourth quarter, with acceleration from the third quarter driven by easier Facilities comparisons, education contract wins, and college sports, though it acknowledges risks to this forecast.
The research firm’s adjusted operating income (AOI) estimates for both the fourth quarter and fiscal 2026 are slightly below consensus, with potential risk that Aramark’s fiscal 2026 AOI and earnings per share guidance could fall below market expectations due to "more tempered margin progression" and startup costs.
Despite near-term challenges, UBS maintains that establishing stronger growth momentum still offers a long-term price re-rating opportunity for Aramark shares.
In other recent news, Aramark has been the focus of several significant developments. The company has refinanced $730 million in term loans, extending the maturity to April 2028, which was facilitated through an amendment to its existing credit agreement with JPMorgan Chase Bank and other financial institutions. Additionally, Aramark completed the repricing of its 2028 Term Loan B, which is expected to generate annual interest expense savings by reducing the interest rate by 25 basis points. Analyst firm Stifel has reiterated its Buy rating on Aramark, maintaining a price target of $49.00 due to the company’s strong growth outlook. Despite softer fiscal third-quarter results, Stifel remains confident in Aramark’s ability to sustain growth. Baird upgraded Aramark’s stock to Outperform, raising its price target to $47.00, pointing to a longer-term opportunity following adjusted market expectations. These developments reflect a broader confidence in Aramark’s growth trajectory and financial strategies.
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