Elis SA: Robust Business Model and Promising Growth Drive Buy Rating

Simon LeChipre, an analyst from Jefferies, has initiated a new Buy rating on Elis SA (ELSSF).

Simon LeChipre has given his Buy rating due to a combination of factors that highlight Elis SA’s robust business model and promising growth prospects. The company’s services, primarily involving the rental and maintenance of linen and workwear, have shown resilience, especially during challenging periods like the Covid crisis. This resilience is supported by a diversified customer base, including a significant portion from the healthcare sector, and a strong track record of management execution.
Furthermore, Elis SA is positioned for compelling medium-term growth, with an expected adjusted EPS growth of approximately 7% CAGR from 2024 to 2027. This growth is driven by organic revenue increases, margin improvements, and potential contributions from acquisitions. Additionally, the company’s strategic shift in capital allocation, focusing on bolt-on acquisitions and returning cash to shareholders, enhances its financial flexibility. These factors, combined with attractive valuation levels, underpin the Buy rating, although potential risks such as macroeconomic challenges and competitive pressures are noted.

In another report released on May 29, Deutsche Bank also maintained a Buy rating on the stock with a €28.00 price target.