J.P. Morgan upgrades Cintas, cuts UniFirst and Vestis on weak outlooks

Investing.com -- Cintas (NASDAQ: CTAS) was upgraded to “overweight” by J.P. Morgan, which also downgraded UniFirst (NYSE: UNF) and Vestis to “underweight” due to operational concerns and limited growth visibility, in a note dated Monday.

Cintas received a December 2026 price target of $239, up from the previously set $210 for December 2025.

The brokerage cited Cintas’ consistent execution, expanding margins and strong customer acquisition, particularly from firms not currently enrolled in rental programs.

Cintas holds a 16% share of the estimated $48 billion U.S. uniform services market and is the largest provider in the segment.

The company is expected to post a 7.6% year-over-year increase in fourth-quarter fiscal 2025 organic, constant currency revenue, with operating margin forecast to rise 60 basis points to 22.8%, despite one fewer workday in the quarter.

Fiscal 2026 revenue growth guidance is projected at 6.5% to 8.5%. Analysts forecast EPS of $5.82 for calendar 2027, with the price target based on a 41x multiple. The company’s balance sheet shows net debt at 0.7x last-twelve-month EBITDA.

UniFirst was downgraded with a $175 price target for December 2026. J.P. Morgan cited inconsistent performance and limited margin recovery prospects.

In the third quarter of fiscal 2025, UniFirst reported $611 million in revenue and $86 million in adjusted EBITDA, which was below estimates due to $5.7 million in legal and advisory expenses.

Adjusted EPS was $2.17. Full-year fiscal 2025 revenue guidance remains at $2.422 billion to $2.432 billion, with EPS raised to $7.60–$8.

The company is in the midst of a multiyear ERP implementation, with total projected costs between $85 million and $100 million.

As of the third quarter, $65 million had been spent. UniFirst previously rejected a $275-per-share takeover offer from Cintas in early 2025.

Vestis, spun off from Aramark in 2023, was downgraded with a price target of $6 for December 2026. J.P. Morgan noted deteriorating revenue and margin trends.

Full-year revenue is projected to decline 3.8% in fiscal 2025, while EBITDA margins are expected to fall to 10.2% from 14.4% two years earlier.

Net debt stands at 4.2x last-twelve-month EBITDA. Annual capex remains under $80 million, below peer levels. Jim Barber, former UPS executive, was appointed CEO in June 2025.

Cintas, Vestis, UniFirst and Alsco collectively held 28% of the U.S. uniform services market as of 2024.

J.P. Morgan said only Cintas has consistently expanded its share through volume growth, scale and operational efficiency.

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