Jefferies has upgraded Sodexo to a buy rating, lifting its target price to €55 from €41 after the French food services operator named Thierry Delaporte as Group CEO - the first time the company has hired an external chief executive since its 1966 founding. The move follows roughly two years of share price declines for the company.
Sodexo shares were trading at €42.66 at the time of the broker note. Jefferies notes the stock has dropped about 40% since 2024, underperforming peers Compass Group and Aramark by roughly 45% and 85% respectively on its measures.
Delaporte assumed the Group CEO role in November 2025 and concurrently took on the North America CEO responsibilities. He is the group's fifth CEO since 1966 and the first recruited from outside the company. Sophie Bellon, who left her executive role a year before her term was due to end, remains as Chairwoman and said Delaporte "will be fully empowered to make decisions, set his own strategy priorities, and evaluate the organization."
Delaporte's background, as outlined by Jefferies, includes 25 years at Capgemini where he served in senior operational roles including Global COO and Deputy CEO, with nearly 15 of those years spent in the United States, followed by his tenure as Wipro Group CEO from 2020 to 2024.
On the financial outlook, Jefferies set its adjusted EPS estimate for FY26 at €4.08, which it notes is roughly 10% below consensus, and at €4.21 for FY27, about 12% below consensus. The brokerage anticipates adjusted EBIT margin will decline to 4% in FY26 from 4.7% in FY25, before gradually recovering back to 4.7% by FY29.
Jefferies points to weak net new wins as a central explanation for Sodexo's relative underperformance. The firm reports Sodexo's net new wins were 0.3% in FY25, compared with 4.5% for Compass and 5.6% for Aramark. Retention at Sodexo was 93.3% versus 96.3% at both peers, using company-provided figures cited by Jefferies. Capital expenditure as a share of revenue was lower at Sodexo as well - 2% in FY25 compared with 3.3% for Compass.
The brokerage also highlights restructuring spend of €561 million over FY20-25 and says recent margin improvement has been driven more by cost-cutting measures than by operating leverage.
North America remains the primary area of concern. Jefferies reports the region accounted for 46% of group revenue and 53% of adjusted EBIT in FY25, amounting to €11.18 billion of revenue and €1.22 billion of adjusted EBIT. The firm expects net new wins in North America to be low-to mid-single digit negative in the first half of FY26.
On valuation, Jefferies calculates the stock is trading at roughly 10 times forward earnings on its estimates versus a historical average of about 13 times. Its €55 base case target equates to an approximate FY27 P/E of 13 times. The broker's downside scenario produces a €35 fair value at about 9 times FY27 earnings, while an upside case implies a €70 target at roughly 16 times.
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Bottom line - Jefferies' upgrade reflects a view that Sodexo's valuation has moved close to trough levels following a prolonged share decline and that the appointment of an external CEO marks a material governance and strategic change. However, the broker's forecasts imply continued margin pressure in the near term and slower sales momentum, particularly in North America, before a targeted recovery through FY29.