Sodexo: Initiation of Coverage- Can Bold U.S. Expansions & Smart Tech Disrupt the Food Service Game? 

Sodexo reported its first half fiscal 2025 results, addressing the challenges and adjustments needed to align their operations with strategic expectations. The firm revised its annual guidance due to slower-than-anticipated growth, with key impacts centered in North America. Despite this, Sodexo maintains confidence in its long-term strategies and operational resilience. A major factor affected the initial growth outlook: Sodexo anticipated organic growth between 5.5% and 6.5% but has since adjusted that to between 3% and 4%. Approximately 80% of this revision is attributed to North American operations, particularly in their Healthcare and Education sectors. Key delays in new contracts within Healthcare and underperformance in Education initiatives contributed significantly to this shortfall. Healthcare was notably impacted by the deferred contribution from a significant partnership, Captis, which will not contribute until fiscal 2026. In Education, expectations around increased student enrollment and new retail initiatives did not manifest, further adding to the underperformance.