In a market rocked by tariffs, trade tensions and recession fears, UBS is making the case that Compass Group PLC (LSE:CPG) might offer some shelter from the storm.
Shares in the contract catering group have dropped around 13% since early March, in line with broader European indices.
But UBS argues the sell-off may be excessive. The bank maintains a Buy rating, citing Compass’s exposure to defensive sectors and a flexible cost structure that could soften the blow of a slowdown.
Roughly 50% of its North American revenue comes from healthcare and education, which tend to be more stable in downturns. By contrast, business and industry clients (more exposed to economic cycles) account for about 35%.
The Swss bank also notes that around 30% of costs are directly tied to food and supplies and that staffing has historically adjusted in proportion to revenue, highlighting strong cost control.
Compass continued to grow organically during the global financial crisis, even as GDP shrank. UBS’s economists expect the US economy to expand 1.5% in 2025 and 0.7% in 2026; a milder backdrop than in 2008–09.
Slower growth could even drive new business, the bank says, as companies look to outsource non-core services and employees shift from the high street to more affordable workplace canteens.
Shares currently trade at about 12 times forecast 2026 EBIT and around 22 times adjusted earnings. UBS has a price target of 3,055p and believes Compass is well positioned to ride out short-term volatility and emerge stronger on the other side.