William Blair initiated research coverage of Vestis Corporation (VSTS $11.65), a leading provider of uniform rental services and workplace supplies across the United States and Canada.
Analyst Tim Mulrooney estimated that the company would generate EBITDA of $341 million in 2024, rising to a projected $373 million in 2025.
“Although Vestis has been around for decades operating as Aramark Uniform Services, investment exposure was limited since the uniform rental business was tucked inside a larger contract catering firm,” said Mulrooney. “Its spin-off as a standalone company in 2023 creates the chance for shareholders to participate in a proven investible market characterized by high recurring revenue, returns to scale, and long-term, sticky customer relationships. In addition, we see a window of opportunity for value creation as a fresh management team blazes a new path for a business that for years played a secondary role to the larger foodservices segment in the budgeting process for resources and growth capital. In our view, Vestis’s opportunity for success will ultimately come down to execution.
“Recent initiatives to reposition the business could yield a structural step-up in organic growth,” added Mulrooney. “This, of course, is easier said than done. The uniform rental market is a highly competitive industry, where any new initiatives will likely be met with a frustrating degree of crosswinds and setbacks. So although we see a long-term opportunity for value creation, we expect that the new playbook will take some time to gain traction.”
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