UBS raised its price target on ARAMARK Holdings (ARMK) to $47.00 from $45.00 and retained a Buy rating, following the company’s fiscal first-quarter report that delivered stronger-than-expected organic growth. ARAMARK shares traded around $42.33 and carry a price-to-earnings ratio of 34.97, a valuation level noted as slightly below UBS’s revised target and close to an independent Fair Value assessment.
The stock climbed 6% on the trading day after the results were released, reversing a recent trend of revenue shortfalls. ARAMARK’s shares have gained 11.12% year-to-date and are up 10.28% over the last 12 months, reflecting improved momentum heading into the fiscal year.
Among the items highlighted by analysts was a sizable healthcare contract award. UBS views that contract as a meaningful contributor to ARAMARK’s net new business trajectory through fiscal 2026 and as supportive of growth prospects into fiscal 2027. The firm left its fiscal 2026 estimates intact, while noting that confidence in the company’s ability to meet fiscal 2026 guidance has risen after the stronger first-quarter performance.
Financial metrics disclosed for the quarter included adjusted earnings per share of $0.51, marginally above consensus of $0.50. Revenue came in at $4.83 billion versus an expectation of $4.74 billion. UBS and other analysts cited the solid quarter, strong contract activity, and high retention rates as rationale for revising price targets.
Stifel raised its price target to $47, pointing to what it described as a solid quarter marked by strong contracting and high retention rates, and kept a Buy rating. Morgan Stanley increased its target to $45, referencing ARAMARK’s 5.0% organic revenue growth in the period, while maintaining an Equalweight rating.
Margins in the quarter were described as slightly lighter, though still within expected ranges. UBS identified specific drivers that could lift margins for the remainder of the year, including improved healthcare cost trends and favorable incentive plan comparisons. Separately, company-level data shows a gross profit margin of 15.52%, a figure characterized as an area requiring improvement.
As of the latest trading, ARAMARK is a market cap participant valued at approximately $11.12 billion and is classified within the Hotels, Restaurants & Leisure industry. The company has a record of paying dividends for 13 consecutive years, with a current yield of 1.17%.
Analysts continue to expect the company to be profitable over the fiscal year, with an EPS forecast of $2.26 for fiscal 2026. UBS emphasized that recent contract wins strengthen visibility into 2027 while maintaining its fiscal 2026 projections following the encouraging start to the year.
Context and implications
- Price-target adjustments by UBS, Stifel, and Morgan Stanley reflect renewed analyst confidence after ARAMARK’s fiscal Q1 beats on revenue and adjusted EPS.
- The healthcare contract award is singled out as a near-term growth driver, with UBS pointing to improved net new business through fiscal 2026 and supporting 2027 prospects.
- Despite slightly compressed margins in the quarter, analysts see several levers that could improve profitability later in the fiscal year.