DA Davidson Sets $30 Five-Year Price Target On Amplify Snack Brands

Amplify Snack Brands Inc BETR has the potential for a higher growth trajectory than peers in the better-for-you snack space. DA Davidson’s Eric M. Gottlieb initiated coverage of the company with a Buy rating and a 5-year price target of $30. The analyst commented that Amplify Snack Brands has been expanding rapidly, and has potential for “superior growth and above-average returns.”

The company’s key product, SkinnyPop, continues to gain market share as well as mindshare, while its household penetration is increasing. “The brand is still in high growth mode and plays in one of the highest growth, highest margin, on-trend food subsectors,” analyst Eric Gottlieb wrote.

Although the company’s sales growth could moderate from the current 39 percent to about 27 percent in both FY16 and FY17, the expected pace is “comparatively robust,” Gottlieb said. He added that Amplify Snack Brands was continuing to increase awareness and distribution, while leverage acquisitions.

Multiple Levers

The company’s brands are in the early stages of growth. Amplify Snack Brands plans to boost sales by “operating in strong growth categories, increasing distribution and share of shelf, increasing household penetration, employing innovation, expanding internationally, and develop new brands, either internally or externally,” the analyst mentioned.

While peers were more established, they also were on “a much lower growth trajectory,” Gottlieb noted. He added that Amplify Snack Brands could be an acquisition target for larger packaged food companies.