Oppenheimer Met With United Natural Foods Management; Here's What Happened

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In a report published Wednesday, Oppenheimer analysts maintained an Outperform rating on
United Natural Foods Inc
UNFI
, after meeting the company's CFO Mark Shamber in Canada. United Natural Foods' share price has declined by 9 percent since the time the company announced its Q2 results in mid-March. This performance compares with a 1 percent gain in the S&P 500 during the same time. In the report Oppenheimer noted, "Based on our recent investor conversations, the slowdown in the conventional channel and out of stocks have remained at the top of investor concerns. Overall, the tone of management remained positive toward the company's competitive position, industry demand dynamics, the Tony's acquisition, and M&A opportunities." Following the meeting, the analysts have greater confidence that the deceleration in the conventional channel is due to "a timing issue" rather than the weakening of the company's competitive position. "We are optimistic that stronger conventional trends and improving out of stocks could fuel healthier comp trends in coming quarters, the analysts said, while adding that the company's shares offer "attractive upside potential for investors with a multi-quarter time horizon." Although the company benefits from growth in products like grains, gluten-free and probiotics, there is an absence of a significant new product trend. "The company has meaningful potential to grow the Tony's business from a historical West Coast presence eastward, in our view. We are optimistic that new anchor customer wins in new geographies and/or growth through M&A could eventually fuel this expansion," the analysts commented. United Natural Foods has expanded through the acquisition route over the past few years and is viewing a number of opportunities. "More M&A, in our view, could further strengthen UNFI's competitive moat and add to earnings," the report added.
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Posted In: Analyst ColorReiterationAnalyst RatingsOppenheimer
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