On Thursday, Stifel, a financial services firm, adjusted its price target for Cintas Corporation (NASDAQ:CTAS), a business services company, from $214.00 to $189.00. The firm maintained its Hold rating on the stock. The revision followed a notable 9.9% drop in Cintas' stock price, which stood in contrast to a 0.4% intraday increase in the S&P 500 index on the same day.
The decrease in the stock's price came after the company's earnings call and was attributed to several factors. Firstly, Cintas' stock was trading at a very high multiple prior to the decline. The stock had experienced a strong year-to-date performance, with InvestingPro data showing an impressive 36.75% gain. Notably, 8 analysts have recently revised their earnings expectations downward for the upcoming period. The company provided a slight downward revision in its annual organic growth guidance, which was considered in the context of the stock's high multiple and its strong performance to date.
Stifel's analyst noted that only minor adjustments were made to their financial model for Cintas. These adjustments included changes to the tax rate and share repurchases, which were recalculated based on the same dollar amount but at a lower stock price. Furthermore, there was a slight modification to the forecast for free cash flow (FCF).
The new price target of $189 reflects a recalibration of expected multiples, which, while still considered high, have been adjusted in light of the tempered growth outlook for the company. The firm's decision to maintain a Hold rating suggests that they do not currently recommend buying or selling Cintas shares but rather holding onto existing positions.
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