DA Davidson Thinks WhiteWave Shares Are Now Worth $55

WhiteWave Foods Co WWAV delivered a top-line and EPS beat. DA Davidson’s Eric M. Gottlieb reiterated a Buy rating for the company, while raising the price target by $5 to $55. The analyst commented there was a runway for growth, with accelerating top line and moderating costs.

WhiteWave Foods’ EPS ex-China JV came in at $0.28, ahead of expectations. The beat was driven mostly by a top line outperformance, Gottlieb mentioned. The company reported revenue of $1.0 billion, representing 14.1 percent year-over-year growth, significantly ahead of expectations.

WhiteWave Foods generated 7.1 percent in organic growth, while the acquisitions of Vega, Wallaby and Magicow contributed $64.3 million in sales. Operating income growth was recorded at 20.8 percent, also beating expectations.

Take On FY16

The EPS estimate for FY16 has been raised from $1.35 to $1.40. “In particular, the F2H should be strong as SAP issues dissipate. “Overall, we are encouraged by strength across all core brands in all key markets with room to grow distribution and expand internationally. Additionally, foreign exchange rates should offer some relief with the depreciation of the US dollar,” Gottlieb wrote.

Take On FY17

The EPS estimate for FY17 has been raised from $1.60 to $1.75 to reflect higher growth rate in the European business with relatively flat results for the Americas. “We have already incorporated the excellent innovation pipeline aiding the top line in the Americas business introduced at CAGNY in February,” the analyst commented.

Gottlieb mentioned that WhiteWave Foods would be able to generate “diverse and growing revenue streams,” driven by innovation and acquisitions. This would also further strengthen the company’s brand equity in key categories.