Sodexo (EXHO.PA): FY26: Convincing message on the turnaround. We wait to see more tangible evidence of stabilisation of the business.

Citi keeps its Neutral/High Risk rating on Sodexo (EXHO.PA) and raises its target price to €65 from €60 on an unchanged valuation methodology, implying 8.4% expected share price return, a 2.8% dividend yield and 11.3% expected total return. FY26 results were solid: revenue came in 0.6% above Visible Alpha consensus (organic growth driven by +2.4% pricing and +0.6% volume, with -0.3% net new and -0.7% contract losses), adjusted operating profit beat by 2.5% at a 3.4% adjusted operating margin. Management flagged stronger-than-anticipated Q4 activity, resilient demand, improving commercial momentum, 94.4% retention and 7.7% development. FY27 guidance was reiterated at +2% to +3% organic revenue growth and an adjusted operating margin broadly in line with 3.4%, with c.-€190m net financial expense (consensus €165m), a 26-27% tax rate and neutral working capital;