BMO Responds To Sysco's Q3 Results, Says 'Plan Is Working'

BMO raised the EPS estimates and price target on the shares of SYSCO Corporation SYY after the food distributor reported better-than-expected third-quarter earnings on favorable weather and the Easter holiday.

Sysco reported adjusted EPS of $0.46, versus BMO's forecast of $0.41 and consensus of $0.42. Analyst Kelly Bania said the company's three-year financial "is working," and the backdrop is favorable.

Late February, the company increased its operating income growth target to "at least $500 million" from the original target of $400 million.

Bania, who has a Market Perform rating on the stock, initially viewed these targets as aggressive. But, the analyst raised estimates on "accelerating local case growth (+3.4 percent, the strongest level in years)," lower admin costs and new market structure.

Related Link: Sysco Provides Update On 3-Year Plan, Boosts Operating Income Growth Target

The analyst's FY2017 and FY2018 EPS estimate moves to $2.29 and $2.53 from $2.14 and $2.26, respectively, as Sysco is set to benefit from the consumer shift toward higher-quality foods.

Bania, who also increased target price to $52 from $44, said Sysco is benefiting from strong trends in ethnic and fresh produce in certain markets in the independent restaurant segment.

Other Voices From The Street

In a related development, CNBC's Jim Cramer stated the food delivery company reported a "really terrific" quarter, but the company's attractiveness extends beyond just one quarterly report.

Nelson Peltz's Trian Partners acquired a stake of more than 7 percent in Sysco back in August 2015. In addition, Peltz was also named to the company's board of directors. According to Cramer, Peltz has a proven track record of picking winners – including Sysco.

Shares of Sysco have gained 17 percent since the start of 2016 and 33 percent over the past year. The stock is currently up 0.16 percent at $48.60.