WhiteWave Downgraded At Goldman Sachs On 'Slowing' Organic Growth

• WhiteWave Foods Co. WWAV shares have declined 13.8 percent over the last three months, touching a low of $40.11 on October 1.
• Judy E. Hong of Goldman Sachs has downgraded the rating on the company from Neutral to Sell, while lowering the price target from $48 to $42.
• Hong expects the stock to underperform its peers, driven by weaker than anticipated organic sales growth in North America.

Analyst Judy Hong still believes, however, that WhiteWave Foods is “well-positioned to capitalize on secular shift towards healthier, organic and premium food and beverage offerings,” although there appears to be risk to the company’s organic sales growth guidance of 10 percent.

Hong now expects the company to see consolidated organix sales growth of 8.5 percent in 3Q15, 9 percent for 2015 and over 8.4 percent in 2016, which are all below the 10 percent organic sales growth guidance for 2015.

According to the Goldman Sachs report, “The biggest driver to this more conservative view is slowing growth for Silk and continued choppy sales trend at Earthbound Farms.”

The slowing sales trend is expected to lead to multiple compression from the current levels. The FY15, FY16 and FY17 EPS estimates have been lowered to about 3-5 percent below the consensus forecasts.