UPDATE: BMO Capital Markets Downgrades WhiteWave Foods Co. to Underperform, Reiterates $17 PT Ahead of Anticipated Growth Deceleration

In a report published Monday, BMO Capital Markets analyst Amit Sharma downgraded the rating on WhiteWave Foods Co. WWAV from Market Perform to Underperform, but reiterated the $17.00 price target. In the report, BMO Capital Markets noted, “Our rating downgrade is based on our view that WWAV's sales growth will decelerate meaningfully to mid-single digits in 2014/15, which, despite improving operating margins, will lead to lower consensus earnings estimates and downward pressure on its premium valuation. While WWAV remains well exposed to the favorable consumer shift to healthier food/beverage products, we believe that the growth momentum enjoyed by the company over the last 8-10 quarters, will weaken significantly owing to 1) intensifying competition in plant-based beverages and iced coffee segments (e.g., Almond Breeze, Starbucks); 2) evolving consumer preferences (soy based to almond based); and 3) moderating consumption trends in the single-serve organic milk and flavored creamers segments. Although improving leverage from ongoing capacity expansion initiatives will likely enable WhiteWave to maintain healthy earnings growth in 2014 and 2015 (low teens), we believe that investors will be less willing to pay for cost-savings-driven earnings growth, and this, coupled with its decelerating top-line growth, makes it a less attractive investment relative to other natural/organic companies with stronger, and more sustainable, sales and growth outlooks (e.g., HAIN).” WhiteWave Foods Co. closed on Friday at $20.05.