Amplify Snack Upgraded To Outperform At Credit Suisse: Here's Why

• Shares of Amplify Snack Brands Inc BETR have increased almost 7 percent over the past month, reaching a high of $12.75 on November 4.
• Robert Moskow of Credit Suisse has upgraded the rating on the company from Neutral to Outperform, while raising the price target from $13 to $16.
• Moskow believes that the robust Q3 results suggest that Amplify Snack Brands is on track to achieving management’s plan, “if not slightly ahead.”

Analyst Robert Moskow expressed greater confidence in the SkinnyPop brand, given that there are several factors that could drive upside, such as higher than expected Paqui sales, international expansion ahead of schedule and potential acquisitions sooner than anticipated.

“The company improved its distribution footprint at several of its biggest customers during the course of the year, and it has good visibility into further distribution gains in 2016,” Moskow said.

In fact, management emphasized its “its early efforts to penetrate the c-store and foodservice channels,” while saying that it expected to get the results of the test “at a major foodservice account” in 1Q16.

Also, customer at key accounts have agreed to merchandise more SkinnyPop products, while improving merchandizing, with one customer intending to start testing the brand internationally in 2016.

According to the Credit Suisse report, “Paqui is on-track for its national launch in 1Q 16. Initial retailer feedback has been very good and acceptance has been high.”

The 2016 sales estimate could prove conservative if the rollout is as successful as the preliminary indications imply.

Amplify Snack Brands reported its Q3 results mostly in line with the consensus, while the gross margin EBITDA was ahead of expectations, “driven by good price realization and slightly lower than anticipated operating costs.”