Investing.com – Sodexo (EPA:) shares fell more than 8% on Tuesday after disappointing first-quarter fiscal 2025 results.
The company reported organic growth of 4.6%, below the consensus estimate of 5.3%.
Despite reaffirming its full-year guidance, which continues to target organic growth of between 5.5% and 6.5%, a weaker-than-expected start to the year has raised concerns among investors.
“In this sense, we will seek clarification on the expected acceleration in growth, especially given that we expect the second quarter to be soft again, requiring a significant increase in the second half, which looks ambitious in the current context,” Jefferies analysts said in the note. .
While the FY25 guidance remains unchanged for now, there is growing uncertainty around the business trajectory, especially as the second quarter is expected to remain soft.
This further fuels concerns about the company’s ability to deliver a strong growth boost in the second half of the year, which some see as an ambitious target given current market conditions.
Given these factors, analysts expect the stock to react to the results weakly, reflecting investor skepticism about the company’s ability to meet forecast growth targets.
“We believe this validates our approach to incorporating SotP into our valuation methodology, capturing lower multiples of FM’s international peers,” RBC Capital Markets analysts said in a note.
“Long-term investors can be reassured by the confident outlook for the second half of the year,” RBC added.