Shares of Cintas are falling after Spruce Point Capital Management released a short report on the name. The firm put a “Strong Sell” rating on the shares with downside risk to $69-$107, or 60% to 75% from current share levels. Spruce Point, known for short selling, believes Cintas’ Fire Protection Services business “has committed fraud and is causing a public safety hazard by having workers conduct fire and safety inspections without proper licenses or permits, and falsify inspections.” In addition, Spruce Point believes Cintas is “facing financial strain” in its core uniform rental business from its 2017 acquisition of G&K for $2.1B. The firm argues that sell-side analysts are “failing to acknowledge any of these problems, or conduct a nuanced valuation of its various business segments to reflect divergent growth and risk profile.” Shares of Cintas are down 4%, or $9.63, to $249.22 in early trading.
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