Fundamental credit research across high yield and leveraged loans

Q3 adj. EBITDA of $557M beat a lowered bar, but on a pro forma basis EBITDA fell about 12% and net leverage rose to 4.8x. The equity stays a HOLD with the target cut to $11.00, the term loan is still my pick, and a new $500M buyback keeps the 2034s on watch.

BUY at $14.09 with a $20.50 target. The Street has FY27 EBITDA at the Q3 run-rate and gives no credit for a Q4 the company has already guided to, and the free cash flow is going to debt.

Hold the Term Loan B-1 at 99.50 (S+225, DM 239) and add at 97.5. The cash flow covers the debt in every case I ran, but the loan already trades with B1 names, its coupon is about to step down and Vestis can repay it at par.

Q3 cleared every test I set on 10/28 and I raised the target to $378, but the stock got to $360.78, 13.3x my FY27 EBITDA and the peer median. The bull and bear cases are now about the same size.

BUY at $259.97 with a $329 target. An SEC inquiry, short reports, four quarters of slowing growth and a weak summer have taken the stock from $738 to 10.5x FY27 EBITDA against a 13.3x peer median, and my base case only needs consensus numbers.

A progress update: moving to bond indentures, reading 808 of them with a model on my laptop, a mistake I made about the ones it got wrong, a small classifier experiment that didn't go the way I expected, and the first scores against labels I've checked myself.