GS ups ISS to 'buy' on scope for shareholder returns, shares jump

Iss A/S

15/04/2024 10:27

** Goldman Sachs upgrades ISS  ISS.CO  to "buy" from
"neutral", saying the Danish services provider's historically
low valuation offers material potential for shareholder returns
    ** The broker expects ISS to beat 2024 organic growth and
margin expectations, which would help reassure the market on the
delivery of its turnaround plan
    ** It forecasts ISS will generate about 65% of its market
cap in equity free cash flow over the next five years
    ** GS expects it to return about 8% of market cap to
shareholders this year
    ** It also sees DKK 2.5 bln ($357.2 mln) of recurring
buybacks over 2025-2028
    ** GS says ISS's valuation is inconsistent with its
fundamentals, seeing more rewards than risks for the shares
    ** However, it acknowledges concerns including uncertainty
around the Deutsche Telekom contract and whether the turnaround
can be delivered in full
    ** The stock is up 6.6% at DKK 130.20 as of 0905 GMT,
compared with GS's new target price of DKK 160
    ** Eight out of 13 analysts rate ISS "strong buy" or "buy",
and five "hold"

($1 = 6.9999 Danish crowns)

 (Reporting by Marta Frąckowiak)
 ((marta.frackowiak@thomsonreuters.com))