Sodexo Starts 2023 Well, With No Sign of Any Slowdown in Activity

Narrow-moat Sodexo delivered a solid first-quarter revenue update, with organic revenue up more than 12%, and headline revenue up north of 20%, driven by positive currency movements. Having just a few months ago released a positively optimistic outlook for 2023, the good news for investors is that there have been no changes to this. With revenue recovering to prepandemic levels in 2022, the big challenge for the company now is to get operating margins back to where they were prior. Having just recently updated our forecasts, we do not expect to make any material changes on the back of this update. We reiterate our EUR 111 fair value estimate and see material upside potential from the prevailing share price.