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Stephens Analyst: United Natural Foods Is My New Best Idea

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Stephens Analyst: United Natural Foods Is My New Best Idea
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In a report published Friday, Stephens analyst Joe Edelstein named United Natural Foods, Inc (NASDAQ: UNFI) as the Best Idea for the remainder of 2015. The analyst maintained an Overweight rating on the company, with a price target of $72.

United Natural preannounced better-than-expected F4Q15 results and issued a preliminary guidance for 2016. The company guided to a 4-6 percent top line growth and adjusted EPS of $2.86-$2.98 in 2016, which analyst Joe Edelstein said appeared to be a "bit conservative."

"We think it potentially sets the Company up to lift the bottom end of its guidance range going forward" Edelstein wrote, while adding, "[W]e are encouraged by +100 bps of accelerated performance into F1Q16, a contract renewal of UNFI's second largest customer, and potential for increased M&A to supplement growth in key regions and product categories."

The adjusted EPS estimate for F2016 has been reduced from $3.00 to $2.93.

United Natural's shares have declined more than 20 percent since F3Q15 due to a slowdown at its largest customer Whole Foods Market, Inc. (NASDAQ: WFM) and a contract loss with Albertsons. The Stephens report pointed out, however, that the contract termination was a one-time event.

United Natural was the lowest cost distributor in its space. Edelstein maintained that the company was poised for robust long-term growth through its retail and supplier partners. "Investors should look at growth across all channels," he added.

"We believe pre-announcing F4Q earnings signifies confidence among management that UNFI's business model is not broken," the report mentioned.

Latest Ratings for UNFI

DateFirmActionFromTo
Sep 2016JefferiesMaintainsHold
Sep 2016BarclaysInitiates Coverage onUnderweight
Sep 2016Deutsche BankMaintainsHold

View More Analyst Ratings for UNFI
View the Latest Analyst Ratings

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