ISS: Pivot from volume to value add player not reflected in 9% 2027E FCF yield

研报英文原文证据摘录

ISS: Pivot from volume to value add player not reflected in 9% 2027E FCF yield

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ISS

Pivot from volume to value add player not

reflected in 9% 2027E FCF yield

Reinstating Coverage: BUY | PO: 334.00 DKK | Price: 289.40 DKK

A repositioned business offering compelling FCF yield 20 July 2026

ISS’s 2025 ROIC was a record 14% and we expect it to hit 20% by 2030E. Improved Equity

operational and financial metrics across the business underpin a compelling growth

algorithm with a 3yr revenue CAGR of 5.8% and 9.2% EBIT CAGR rising to a 19% EPS Tim Ramskill, CFA >>

CAGR underpinned by DKK18.0bn of cash returns by 2030E. The 2027E FCF yield of 9% Research Analyst

MLI (UK)

fails to capture these positive attributes. We re-instate coverage with a Buy rating. +44 20 7996 3050

tim.ramskill@bofa.com

1) Have the quality of ISS earnings improved over time? Virginia Montorsi >>

Research Analyst

We have re-appraised the ISS change story and see clear evidence of quality MLI (UK)

improvement noting: i) c25% of the business has been sold, ii) client retention has risen 44 20 7996 2921

virginia.montorsi@bofa.com

4pts, iii) revenue per employee is outpacing inflation by 2x and iv), hiring needs have

fallen 56%. Free cashflow conversion is over 100%.

2) Is c7% organic EBIT growth sustainable? Stock Data

Ahead of the September Capital Markets Day (CMD), we model 13% in 2026E and then Price 289.40 DKK

7% across 2027/28E. We see upside risks stemming from further gains on client Price Objective 334.00 DKK

retention (now 94%), US growth optionality (although this needs to be approached Date Established 20-Jul-2026

carefully) and labour efficiency helped by a tighter business (headcount down 40% since Investment Opinion B-1-7

2011) 52-Week Range 182.10 DKK-290.60 DKK