NEW YORK (AP) ¿ An analyst Wednesday downgraded shares of uniform rental companies, saying they are expensive, their market is challenging and prices to rent uniforms are "horrendous."
Baird analyst Andrea E. Wirth downgraded shares of Cincinnati, Ohio-based Cintas Corp., Minnetonka, Minn.-based G&K Services Inc. and Wilmington, Mass.-based UniFirst Corp. to "Underweight" from "Neutral."
She said the price of the stocks is "too rich to support what we believe will be a substantially more difficult recovery than previous cycles."
The downgrades followed a survey of the sector, which also led her to cut her earnings forecasts for the companies."We continue to believe growth rates in the uniform industry will likely lag those of the general economy and exacerbated by significant pricing pressure," Wirth wrote in a client note. "We would therefore expect the uniform stocks to underperform the market as economic conditions continue to improve and GDP growth turns positive, but uniform rental fundamentals experience a more muted and protracted recovery."