LONDON (ShareCast) - Exane BNP Paribas downgraded Compass Group to 'neutral' from 'outperform' and cut the price target to 1,240p from 1,330p.
"After years of outperformance, we believe Compass may no longer be the best choice in the sector," it said, noting a preference for Sodexo.

Exane said that Compass is now working from an already high base and further improvements are likely to be more modest. Momentum is likely to favour the laggards, such as Sodexo, and self-help restructuring has further to go at Sodexo and Elior, it said.

Still, it noted that Compass is a well-managed, cost-efficient business with a record of commercial outperformance and said that these factors together ensure good visibility on steadily growing cash generation, reinforcing the company's reputation as a generous cash-cow.

"Moreover momentum remains good with the prospect of continuing strong organic growth in the US and a modest improvement in Europe," said Exane.

It added that the strategy to grow the top-line in Europe and in Emerging countries has proved its worth.

"Overall Compass remains a blue chip stock and deserves a premium to its sector."

At 10:17, shares were down 0.5% at 1,117p.

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