Compass Group’s Price Target Seeing Bullish Analyst Sentiment

Analysts have been increasing their target price on Compass Group shares (LON: CPG) in recent weeks, with a notable raise from Berenberg pushing their target from 2,460.0p to 2,900.0p. The brokerage has highlighted several positive factors, including a strong set of financial results and a promising outlook for Compass Group.

Other names to raise in recent weeks include Barclays (3,000p from 2,500p), Morgan Stanley (2,900 from 2,300), JP Morgan (3,050 from 2,800), RBC Capital (2,625 from 2,400), and Deutsche Bank (2,600 from 2,500).

Berenberg maintained its ‘buy' rating on Compass stock, indicating optimism about the company's future performance. Comparing actual results to forecast, Compass delivered solid FY24 outcomes that slightly surpassed market expectations. Furthermore, the guidance for FY25 remains largely aligned with the broader market's forecasts.

Despite these positives, the absence of a stock buyback and more country exits have led Berenberg to lower its earnings per share estimates for Compass. However, the analysts consider the group's conservative balance sheet a strategic advantage, which could lead to earnings surprises.

Looking at valuation, Compass shares have been re-evaluated in 2025, positioning them ahead of historical levels. Berenberg notes that while there may be limited room for further multiple expansion, the long-term growth narrative remains intact. The analysis suggests a cautious yet optimistic view of Compass's place in the market, focusing on the sustainable development of its business model and operational strategy.

Berenberg's upward revision reflects a mix of strong historical performance, strategic financial management, and potential for growth. Investors are advised to watch how Compass’s strategic decisions will unfold in the coming financial periods. This analysis represents a confidence vote in Compass's ability to leverage its current assets and strategies for sustained growth in the competitive food service sector.