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Investing.com -- ISS (CSE:ISS) shares advanced more than 4% after Jefferies raised its rating on the facilities services group to "buy" from "hold" and set a price target of DKK240, up from DKK170.
The brokerage said stronger commercial momentum, improving free cash flow and the resolution of a contract dispute supported its more positive stance.
The analysts noted that ISS has already gained 35% this year, but still trades at 10.5 times forecast 2026 earnings or a 10% free cash flow yield.
They said the valuation remains attractive, projecting earnings growth of 12% to 20% annually between 2025 and 2027.
Jefferies expects organic growth to accelerate to about 5.5% in 2026, compared with consensus forecasts of 4.6%.
The brokerage flagged 15 contracts signed in 2025, including six new agreements and eight expansions, which it said underpin more than 2% net new growth.
Contract attrition in the United States is also expected to ease, while a large U.K. Department for Work and Pensions contract begins ramping up in the fourth quarter of 2025.
The company’s financial outlook was revised higher. Revenue is projected to reach DKK84.8 billion in 2025, DKK89.4 billion in 2026 and DKK93.4 billion in 2027. EBITA margins are forecast at 5.1% in 2025, 5.2% in 2026 and 5.3% in 2027.
Adjusted earnings per share are expected to rise from DKK16.4 in 2025 to DKK19.5 in 2026 and DKK21.4 in 2027.
Free cash flow is projected at DKK3.1 billion in 2025, DKK2.8 billion in 2026 and DKK3 billion in 2027. Dividend per share is estimated to grow from DKK3.3 in 2025 to DKK4.3 in 2027.
Jefferies said ISS increased its ongoing share buyback to DKK3 billion in August and has capacity for up to DKK5 billion in additional repurchases through 2027 while keeping leverage steady.
A potential catalyst remains the resolution of an arbitration with Deutsche Telekom over a disputed contract.
Jefferies said the case could see ISS recover about DKK600 million in withheld payments and improve margins on the deal, which runs until 2029.
The brokerage said its higher price target, implying about 25% upside from current levels, is based on a 13 times 2026 earnings multiple, a discounted cash flow model, and free cash flow yield comparisons.