Bernstein Sees Take-Out Potential At WhiteWave

• WhiteWave Foods Co WWAV shares are down 19 percent in the last three months, from a high of $52.16 on August 5.
• Bernstein’s Alexia Howard maintained an Outperform rating on the company, with a price target of $52.
• The recent pullback in the company’s shares offers an attractive entry point, Howard mentioned.

WhiteWave's shares have been under pressure after the company reported its 2Q15 results on August 7. Investors contemplated the possibility of a takeout, after the completion of 2 years from the company’s spin from Dean Foods, analyst Alexia Howard said.

More recently, WhiteWave's shares declined on concerns surrounding decelerating trends in US Nielsen data, which indicates a slowdown from 7.2 percent y/y growth last quarter to merely 5.4 percent in the current quarter. The company’s shares have declined 23 percent from their peak at $52.50.

Howard believes that the recent sell-off provides “an attractive entry point for a high quality name that continues to deliver mid-to-high teen EPS growth.” Although there has been a slowdown in US Nielsen data, the latest Nielsen sales growth data has accelerated to 5.9 percent y/y in the last 4 weeks.

“We expect growth to remain in the mid-single digit range driven by favorable health & wellness trends,” Howard wrote. He added that Walmart, which contributes around 15 percent of WhiteWave’s sales, had recently announced its plans to focus on organics and fresh produce, “where the company over-indexes.”

Although there have been no bids as yet, WhiteWave could become a takeout target, given its above average growth potential, the analyst commented. The possible acquirers include General Mills, Campbell Soup and Kellogg.