Hold Rating on UniFirst: Attractive Cintas Offer Overshadowed by Governance Constraints and Weak Margin Outlook

UBS analyst Joshua Chan maintained a Hold rating on UniFirst yesterday and set a price target of $182.00.

Joshua Chan has given his Hold rating due to a combination of factors related to both the strategic situation and UniFirst’s standalone outlook. He acknowledges that Cintas’s renewed $275 per share proposal, now enhanced with a sizeable reverse termination fee to mitigate antitrust risk, is financially and strategically attractive for UniFirst shareholders. However, he also notes that UniFirst’s governance structure, dominated by the Croatti family through high-vote Class B shares, significantly constrains the likelihood of a deal moving forward, especially given the family’s recent strong support for the current board and its reluctance to engage with Cintas.

At the same time, Chan highlights that UniFirst’s recent operating performance has been uneven, with guidance now pointing to a decline in EBITDA margin in fiscal 2026 instead of progress toward previously discussed high-teens margin ambitions. While he sees a path to modest revenue growth, he views the margin targets as increasingly challenging and observes that the company has not provided a clear timetable to reach those improved financial levels. Given these uncertainties and the lack of visible catalysts to close the valuation gap to Cintas’s offer on a standalone basis, his price target of $182 per share remains well below the proposed takeout price. As a result, he believes the risk/reward profile is balanced rather than compelling, supporting a Hold rather than a more decisive recommendation.