Deutsche Bank Upgrades SYSCO On Favorable Risk/Reward

In a report published Tuesday, Deutsche Bank analyst Karen Short upgraded the rating on

from Hold to Buy, and raised the price target from $40.00 to $50.00. In the report, Deutsche Bank noted, “We are upgrading Sysco (‘SYY') to Buy from Hold based on the favorable risk/reward at the current level. In the event the FTC approves the merger, we value SYY at $50 (+30% upside, 60% probability). In addition: 1) sentiment is negative; and 2) underlying foodservice trends are improving. In the event the FTC blocks the transaction, we see downside to $38.50 (40% probability), in line with yesterday's close. In our downside scenario, we value SYY at an EV/EBITDA of 9.0x - a slight discount to the 10-year avg - reasonable given favorable metrics on FCF yield, ROIC, and dividend yield vs. the peer group we have selected.” SYSCO closed on Monday at $38.43.