Sodexo shares at 15-month high after JPMorgan upgrades stock to Overweight

Sodexo shares reached a 15-month peak on Thursday after JPMorgan upgraded the company's stock to "overweight" from "neutral" and raised its price target to €68 from €54. The French catering group's shares surged 4.8% to €59.10, marking their highest level since early June 2025. This significant move outpaced the broader French market, which saw a slight increase of around 0.5% in early trading.

JPMorgan cited upcoming fiscal 2027 as a potential inflection point for new-business development and highlighted the company's recent Meta contract win as a key proof point. The brokerage noted that Sodexo is beginning to price in a turnaround, with shares now trading at approximately 8 times the one-year forward valuation, up from around 7 times after its first-half reset.

The bank expects fiscal 2027 to be the first year in which Sodexo breaks its recent decline in new business. JPMorgan also believes the shares remain relatively inexpensive compared to their historical valuation and peers, suggesting room for higher estimates and potential multiple expansion if execution improves. Their new €68 target implies about a 20% upside from the September 16 closing price of €56.40.

JPMorgan emphasized that contract wins remain the first major proof point for the company's turnaround. They forecast that Sodexo's new business will return to slightly positive territory in fiscal 2027, bolstered by the Meta contract announced in July. The bank anticipates a gradual recovery rather than a sharp rebound, with EBIT margins expected to improve to 4.6% by fiscal 2030 from 3.3% in fiscal 2026, while cash conversion rates are projected to rise toward around 50% from the current level below 40%.