UPDATE: Deutsche Bank Initiates Coverage on Sysco on Multiple Negative Factors

In a report published Thursday, Deutsche Bank analyst Karen Short initiated coverage on Sysco Corporation SYY with a Hold rating and $33.00 price target. In the report, Deutsche Bank “We are initiating coverage of SYY with a Hold rating and $33 price target. Our price target values the stock at an EV/EBITDA of 8.9x and a P/E of 17.3x. Our Hold rating is based on several factors: 1) ROIC has been declining for years and we have yet to see any evidence that this trend will reverse; 2) for a period of time, SYY's valuation multiple on EV/EBITDAR did contract in sympathy with ROIC and a slower top line - but more recently the multiple has again started to expand despite lack of improvement in the other elements; and 3) as a result, SYY's relative valuation multiple has continued to expand.” Sysco Corporation closed on Wednesday at $32.01.