KeyBanc Starts UniFirst Corp (UNF) at Hold; Expect Investments to Drive Long-Term Upside, But N-T Limited Employment Visibility

KeyBanc initiates coverage on UniFirst Corp (NYSE: UNF) with a Hold.

KeyBanc analyst said, "CATALYST #1: Recent Investments Should Drive Structural Improvement in Margin Performance - Through strong efficiency-focused capex spend and strategic utilization of used stock inventory, UNF was able to strengthen its operating margin by 240 basis points over the last cycle (FY03-FY08), while its peers Cintas Corporation (NASDAQ: CTAS) and G&K Services, Inc. (NASDAQ: GKSR) declined by 110 basis points and 80 basis points, respectively."

"CATALYST #2: UNF's Improved Margin Profile Could Warrant a More Favorable Multiple - Given the structural improvement in margin profile and acknowledging the limited trading liquidity and voting/control structure, we believe UNF warrants a more favorable multiple than it currently receives."

"CATALYST #3: We Believe UNF Is Looking to Bolster Revenues, Profitability Through Deals - UNF has historically been acquisitive, adding 1-2% per year in revenue from deals. We expect this trend to continue as the firm pursues uniform rental acquisitions not only in new geographies, but also in existing territories in order to derive significant volume/density related synergy."

For an analyst ratings summary and ratings history on UniFirst Corp click here. For more ratings news on UniFirst Corp click here.

Shares of UniFirst Corp closed at $57.43 yesterday.

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