Mixed Market Dynamics and Contract Trends Lead to Hold Rating for ARAMARK Holdings

Analyst Toni Kaplan of Morgan Stanley maintained a Hold rating on ARAMARK Holdings (ARMK – Research Report), retaining the price target of $42.00.

Toni Kaplan has given his Hold rating due to a combination of factors related to ARAMARK Holdings’ performance and market position. The company’s largest segment, Sports, Leisure, and Corrections, is projected to generate $4 billion in 2024, with a growth rate of 12.6%. This segment is comparable in size to Compass’ similar segment and significantly larger than Sodexo’s. However, ARAMARK’s market share in the major U.S. sports sector is approximately 20%, which is behind Compass but ahead of Sodexo.
Despite having contracts with 25 U.S. professional sports teams, ARAMARK has seen a 29% decline in major professional sports contracts since 2019, although its collegiate athletics partnerships have increased by 50% in 2024. The revenue per team varies significantly across different sports leagues, with the company earning the most from MLB teams. These mixed dynamics in market share and contract trends contribute to the Hold rating, as the company faces both opportunities and challenges in its key segments.

According to TipRanks, Kaplan is a 3-star analyst with an average return of 2.4% and a 56.73% success rate. Kaplan covers the Industrials sector, focusing on stocks such as ARAMARK Holdings, Equifax, and Republic Services.