United Natural Foods Sinks After Rotten Q4 Earnings

United Natural Foods Inc UNFI shares are getting crushed after reporting a fourth-quarter earnings miss on Tuesday.

United Natural Foods reported quarterly earnings of 44 cents per share, which missed the analyst consensus estimate of 52 cents. The company reported quarterly sales of $6.41 billion, which missed the analyst consensus estimate of $6.42 billion.

Challenges Remain

Wells Fargo analyst Edward Kelly said the company delivered another highly disappointing update that should pressure a stock price that was improving heading into earnings. He thinks the company faces structural challenges in a rapidly evolving and competitive environment.

“Overall, we believe the update was a clear incremental negative, as it raises many questions around the strategic and financial outlook of the company,” Kelly wrote in a note.

Wells Fargo maintains a Market Perform rating and lowered its price target from $10 to $9.

Staying The Course

Buckingham Research analyst Eric Larson is staying the course on the company despite weak results. He believes 2020 adjusted EBITDA guidance is conservative, but the upside is limited until the retail banners are sold.

While the stock appears cheap, the margin for execution error remains minimal.

“Given the large number of moving pieces and potentially high execution risk, we believe the stock will remain volatile near-term,” Larson wrote in a note.

Buckingham maintains a Neutral rating with a $11 price target.

United Natural Foods shares traded down 27% to $8.08 at time of publication.

Related Links:

Stitch Fix, United Natural Foods Make Big Moves In Tuesday's After-Hours Session

Whole Foods Supplier United Natural Food's Q2 Print Leaves Bear Analysts Unmoved