Shore Capital hails long-term growth potential at Compass
By Benjamin Chiou
Date: Tuesday 22 Jul 2025
(Sharecast News) - Shares in Compass jumped on Tuesday after a strong third-quarter update from the catering group, prompting broker Shore Capital to reiterate its longstanding 'buy' recommendation on the stock.
Analyst Greg Johnson noted in a research note that the stock's valuation multiple is currently at the higher end of the range its been over the past decade - EV/EBITDA of 14x, compared with the 12-15x range since 2015 excluding the pandemic years.
However, he said: "We continue to highlight the attractive long-term structural growth opportunity (organic growth of 6-8% vs 5% historically) and its proven ability to manage through inflationary periods and continued strong execution."
Johnson said he expects earnings per share estimates for the current year to be upgraded by a mid-single-digit percentage following Tuesday's update, in which Compass pointed to operating profit growth "towards 11%", compared with earlier guidance of a high single-digit improvement.
Organic growth in the third quarter came in at 8.6%, in line with the 8.5% growth recorded in the first half. Shore Capital had expected a "modest slowdown".
The stock was up 6.2% at 2,681p by 1108 BST.
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