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Morgan Stanley Has Mixed Feelings On SYSCO

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Morgan Stanley initiated coverage on SYSCO (NYSE: SYY) with a $40 price target (5.8 percent upside) and Equal-weight rating.

One of the main concerns Morgan Stanley has regards the effectiveness of Sysco’s transformation: “The company's business initiatives seek to create the foundation for future growth and margin expansion. At the midpoint of company estimates, we calculate expected benefits can add over 100bps to FY15 operating margins; if Sysco is successful, these changes can be material given current margins in the 4-5% range.”

Related: MKM Says Pandora Could Be Worth $115/Share In 5 Years

Analyst Vincent Sinisi further commented on the merger with US Foods. Sinisi thinks the deal will add approximately $600 million in annual cost savings after a few years, leading to a $0.52 increase in EPS.

The $40 price target is based on 21 times forward PE, which is above the historical ratio.

Latest Ratings for SYY

DateFirmActionFromTo
Aug 2019MaintainsOverweight
Aug 2019MaintainsOutperform
Aug 2019MaintainsEqual-Weight

View More Analyst Ratings for SYY
View the Latest Analyst Ratings

Posted-In: Morgan Stanley Vincent SinisiAnalyst Color Price Target Initiation Analyst Ratings

 

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