BofA Securities has resumed coverage of Cintas Corporation (NASDAQ: CTAS), assigning a Neutral rating and establishing a $215 price target.
In its note, BofA described Cintas as the leading supplier of uniform rental and facility services in North America and emphasized the importance of its contract-driven business, which accounts for approximately 77% of the company's revenue. That recurring revenue base is central to the firm's view of Cintas' durability.
BofA analyst Curtis Nagle drew attention to changes in incremental margins as a result of recent investments. Where incremental margins previously sat in the 40-50% range, they narrowed to roughly 27% in the second quarter of fiscal 2026. Nagle attributed the decline to near-term spending intended to support longer-term efficiency gains and expanded cross-selling opportunities, describing those expenditures as strategic rather than cyclical.
While reiterating positive structural attributes, the analyst tempered enthusiasm with a valuation caveat. "We are constructive on CTAS’s consistent HSD organic growth, best-in-class execution and margin gains from tech upgrades and scale. But we think this is reflected in valuation with shares inline with the 5yr avg. and at an 80% premium to comps," the note said. BofA also stated separately that Cintas shares trade in line with the company's five-year average and carry an 80% premium versus comparable companies.
Concurrent corporate developments
Cintas has been active on several fronts beyond the coverage note. UniFirst Corporation confirmed it received an unsolicited, non-binding proposal from Cintas to buy all outstanding UniFirst shares for $275 per share in cash. The confirmation follows reporting of active acquisition discussions and a December resubmission of Cintas' takeover offer.
On the shareholder-return front, Cintas declared a quarterly cash dividend of $0.45 per share. The company noted that this pattern reflects 42 consecutive years of annual dividend increases since its initial public offering, underscoring a long-standing commitment to raising its dividend.
Outside of Cintas, RBC Capital has left its Sector Perform rating and $206 price target unchanged for the company, pointing to Cintas' ability to withstand macroeconomic uncertainty and its historical record of surpassing earnings estimates.
Separately, in an industry leadership move, Paychex, Inc. appointed J. Michael Hansen, who previously served as Cintas' chief financial officer, as an independent director—bringing his financial experience to Paychex's board.
Takeaway
BofA's reinstatement frames Cintas as a business with high recurring revenue and strategic investments intended to support future margin expansion and sales synergies, while also flagging current valuation levels relative to peers. At the same time, Cintas is engaged in notable strategic activity, from an unsolicited acquisition proposal for UniFirst to continued dividend increases and board-level movements in the industry.