Compass Group PLC (LON:CPG) is “the most exposed to the longer-term structural changes to business models” among European catering groups as a result of the rise of home working during the COVID-19 pandemic, according to analysts at JP Morgan.
In a note on Tuesday, the investment bank reiterated its ‘underweight’ rating and 1,000p target price on the FTSE 100 firm, adding that policy proposals from incoming US president Joe Biden to tax firms more and also raise the minimum wage are “rather unsupportive” as it will discourage the use of office space and reduce the number of office-based white-collar workers.
JP Morgan also said that they believed the pandemic will “accelerate” the shift of wallet spending from “out-of-home to in-home triggered by [working from home]” which in turn will underpin further growth in employee benefits in areas such as meal vouchers and virtual canteens rather than in-office catering services.
Instead, the bank said firms such as French firm Sodexo, which provides food services but also other employee benefits and facilities, will be better placed to “benefit from a more diversified business mix”.
Shares in Compass were up 0.4% at 1,415p in mid-afternoon trading.