Analysts at Bank of America (BoA) have upgraded their rating and price target for Cintas (NASDAQ:CTAS) ahead of its first quarter fiscal 2024 results on their view the company is “dressed for success” going into the new year.
They awarded the provider of corporate identity uniforms and other business services a ‘Buy’ rating, up from ‘Neutral,’ and upped their price target on Cintas (NASDAQ:CTAS) stock from US$523 to US$580.
Cintas shares traded at about $522 late morning on Wednesday.
The analysts wrote in a note to clients that, as their confidence builds about a potential U.S. economic soft landing, they were upgrading their rating on Cintas optimistically.
“Since the Global Financial Crisis, it has established an admirable record for strong execution and healthy capital returns,” they wrote.
“With BofA's economics team no longer expecting a near-term recession, we're more confident in Cintas' sales and margin momentum.”
The analysts also highlighted that Cintas has a track record of beating estimates and raising guidance, beating the mid-point of its initial earnings per share (EPS) guidance by 7% in both fiscal 2022 and 2023.
“With think CTAS is poised for an EPS beat driven by sales and margin outperformance,” they wrote.
“It benefits from an ongoing secular shift to outsourcing, as well as its focus on route density and cost initiatives.”
They added that Cintas’ enterprise resource planning and salesforce investments and a wide breadth of services fuel cross-selling.
Wall Street analysts, on average, expect Cintas to report a year-over-year increase in both revenue and earnings when it hands down its 1Q fiscal 2024 results on Tuesday, September 26.
They expect revenue to rise 7.3% from $2.17 billion in the year-ago quarter to $2.32 billion, according to Zacks Consensus Estimate.
They expect EPS to increase by 7.7% from $3.39 to $3.65.
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