Wells Fargo analyst Seth Weber maintained a Hold rating on Cintas (CTAS – Research Report) yesterday and set a price target of $615.00.
Seth Weber has given his Hold rating due to a combination of factors related to Cintas’s recent performance and market valuation. Cintas’s second quarter results were strong, with revenue and EPS exceeding consensus estimates, indicating a robust market and opportunity for growth in uniform rental and facilities services. This was complemented by a higher than expected gross margin and an increase in share repurchase activity, both of which are seen as positive indicators. However, despite these favorable outcomes, Weber’s Equal Weight (Hold) rating largely stems from the stock’s valuation, with Cintas shares trading at approximately 38 times the midpoint of estimated 2024 earnings per share, suggesting that the stock may be fully valued at current levels.
Moreover, the company’s execution in finding new business and generating growth, primarily from volume, was better than anticipated. The consistent revenue growth across all segments and a margin beat in the First Aid and Safety division signal strength in the company’s operations. Additionally, the raised financial projections for FY24 are expected to align with or surpass consensus expectations. Nonetheless, even with these positive aspects, the current share price appears to reflect these optimistic forecasts, prompting Weber to maintain a Hold rating rather than an upgrade, as the potential for significant upward price movement may be limited in the near term given the current valuation.
According to TipRanks, Weber is a top 100 analyst with an average return of 23.3% and a 67.51% success rate. Weber covers the Industrials sector, focusing on stocks such as Cintas, TransUnion, and WillScot Mobile Mini Holdings.
In another report released on December 7, Deutsche Bank also downgraded the stock to a Hold with a $590.00 price target.
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Cintas (CTAS) Company Description:
Founded in 1968, Ohio-based Cintas Corp. provides corporate identity uniforms through rental and sales programs, and related business services primarily in North America, Latin America, Europe, and Asia. It operates through Uniform Rental and Facility Services and First Aid and Safety Services segments.
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