WhiteWave Still Attractive After Vega Acquisition: JPMorgan

In a report published Wednesday, JPMorgan analyst Ken Goldman maintained an Overweight rating on

, while raising the price target from $51 to $52, after the company announced its intention to acquire Vega. WhiteWave plans to purchase Vega, a Vancouver-based provider of plant-based powdered shakes for $550MM. WhiteWave expects the acquisition to be accretive by at least 6c in 2016. "Assuming top-line growth comes in as we anticipate, we estimate the deal will add over $150MM in sales during its first year, with nearly a 20% EBIT margin (versus around 9% for legacy WWAV)," analyst Ken Goldman said. Vega has a strong foothold in specialty retailers. However, WhiteWave's goal is to "quickly expand distribution nationwide." Goldman commented, "This makes sense to us. We see the need for a large, national brand in the plant-based powdered shakes category, and we would not be surprised if growth stayed above 20% for the next couple of years on distribution gains alone." The EPS estimates for 2015 and 2016 have been raised from $1.12 to $1.15 and from $1.31 to $1.37, respectively, to reflect the pending transaction. "Though we appreciate that, even if only in perception, it renders WWAV less of a near-term takeout candidate, we like the deal overall," Goldman added.