Bank of America (BofA) has doubled down on its optimism for ISS, upgrading the stock from Underperform to Buy and setting a Street-high price target of 260 Danish crowns. This move reflects improving earnings momentum, a turnaround in net new business, and stronger cash generation that supports shareholder returns. Analyst Simona Sarli expects ISS's rally, which started in 2025, to continue into 2026.

The upgrade is driven by above-consensus earnings estimates, a recovery in net new wins after seven straight quarters of decline, and a robust balance sheet that supports attractive payouts. BofA's earnings per share (EPS) estimates for 2026-2027 are 4-9% higher than the Street's, reflecting improved commercial momentum and a reduced share count due to buybacks. Since mid-2025, commercial trends have improved, with a slowdown in office space reductions and a return-to-office trend that BofA sees as a tailwind for 2026.

ISS has announced 10 new contracts and 12 expansions, with most starting late in 2025 or early 2026. BofA anticipates net new business to turn positive next year, with a projected +1.5% growth. Free cash flow (FCF) is another key driver, expected to rise from below 2 billion crowns to almost 3.1 billion by 2027, with cash conversion reaching over 60% in 2026-2027.

According to Sarli, ISS's payout framework suggests dividends and buybacks could deliver a total shareholder payout yield of about 10% per year, with 7-8% coming from share repurchases. BofA argues that the stock, currently trading below mid-cycle levels, deserves to trade in line with historical multiples as commercial momentum restores, margins improve, and capital allocation remains shareholder-friendly.