UPDATE: Stifel Nicolaus Upgrades Dean Foods to Buy; Business is Undervalued

Stifel Nicolaus upgraded Dean Foods

from Hold to Buy and announced a $21.00 price target. Stifel Nicolaus noted, "Within the next few months, we believe Dean Foods will nearly complete its transformation as we expect most of the WhiteWave business to be spun-off to shareholders, its balance sheet should push below 3X debt/EBITDA, the company could introduce a dividend payment that could hold a 4%+ yield, and the earnings growth should stabilize following the lost customer, a stable milk price environment, and strong cost savings realization. Valuation is a catalyst for the stock – when excluding the value of the WhiteWave stake we find the base dairy business trading at just $5.50 per share and in relation to the $450 million in EBITDA it maintains a roughly 5X EV/EBITDA multiple." Dean Foods closed at $17.27 on Thursday.