UPDATE: KeyBanc Capital Markets Initiates Coverage of Bob Evans Farms with Hold Rating

In a report published Friday, KeyBanc Capital Markets initiated coverage of Bob Evans Farms BOBE with a Hold rating. KeyBanc noted, “Our concerns include: 1) Bob Evans SRS have been weak the past several quarters with little indication the trend will improve; and 2) free cash flow will likely fall during the next couple of years as the Company invests in a remodel program that appears to be defensive. We like the following: 1) revenue and margin at the Food Products division should improve in FY13 as the sides business expands; and 2) several strategic options to enhance shareholder value.” Bob Evans Farms closed yesterday at $39.80.