Raising Price Target On WhiteWave Foods To $52 To Reflect Outlook And Valuations: Credit Suisse

Credit Suisse analysts, Robert Koskow, Robert Connor, and Cathy Xu, felt that WhiteWave Foods Co

deserved better valuations to reflect strong outlook following the better than expected earnings number from the company. The brokerage has boosted its price target to $52.00 from $43.00 and retained the Outperform rating on the shares of the company. The three analysts indicated that their 12-month target price was based on an EV/EBITDA multiple of 15.5x their forward estimate, which was in-line with fast-growing peers and a 24% premium to conventional food in the United States. Credit Suisse analysts pointed out that several investors were worried that Whitewave's growth rate would slowdown in the first quarter citing intensive competition in the beverage category. Also there were concerns about business losses in Fresh Foods during the ill-fated SAP transition. The three analysts commented," Importantly, the plant-based beverage business (Silk and So) still grew modestly in the quarter and Fresh Foods seems poised to return to growth once its new warehouse comes on-line in 2Q. We continue to view Whitewave as a competitively advantaged company operating in the high growth, on-trend health & wellness segment of the industry with plenty of room for tack-on acquisitions." The brokerage increased their EPS estimations to $1.41 for the current year and $1.64 for the next year. Its action came on the back of the company delivering $0.02 a share higher than consensus of $0.26. The key point to the renewed optimism was that the company achieved 8% organic revenue growth, which was one percentage point better than Credit Suisse estimated. The upside came from Coffee creamers and premium dairy recording 10% and 16% growth. The analysts have also felt that the adjusted operating income topped its expectations by $5 million as it continued to gain from positive operating leverage from supply chain investments apart from volume growth. At the time of writing the article, the stock traded 1.10% or $0.53 down at $44.04.