UPDATE: KeyBanc Capital Markets Upgrades G&K Services to Buy; Margin Improvement Expected

KeyBanc Capital Markets raises its rating on G&K Services

from Hold to Buy and introduces a $37 price target on shares. KeyBanc Capital Markets says, "We have become more favorable toward GKSR primarily due to our view that the Company has a significant cost takeout catalyst that could alone produce operating margin expansion of at least 200-250 bps over the next two to three years. Moreover, in the current macro environment that is demonstrating non-linear improvement in job creation (the primary driver for the uniform rental names) we prefer GKSR's shares due to our view that imminent efficiency gains should drive earnings growth, regardless of the pace of recovery in employment." GKSR closed at $30.23 on Wednesday.