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Analyst: As The Food Sector Consolidates, Hain Celestial Could Be Attractive M&A Target

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Analyst: As The Food Sector Consolidates, Hain Celestial Could Be Attractive M&A Target
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Two notable M&A deals in the food sector have many investors questioning which company could be the next to sell itself at a premium. The answer may be Hain Celestial Group Inc (NASDAQ: HAIN), according to Maxim Group. 

The Analyst

Maxim Group's Anthony Vendetti maintains a Buy rating on Hain Celestial's stock with an unchanged $50 price target.

The Thesis

Monday's two M&A deals mark a continuation of consolidation within the consumer packaged goods industry over the past three months, Vendetti said in a research report. (See the analyst's track record here.) 

Since most of the deals have focused on the healthy snacking space, it would be reasonable to assume that Hain Celestial is an attractive acquisition target, as it's a leading producer of "better-for-you" snacks, Vendetti said. 

A recent Bloomberg report suggested that a small handful of companies are very much interested in acquiring Hain Celestial, the analyst said. A "starting point" price tag for such a deal would be in the $55-to-$60-per-share range based on similar recent transactions, Vendetti said. 

The five most recent acquisitions of public food companies show that the companies were sold at an average multiple of 2.5x EV/revenue and 18.8x EV/EBITDA for the year prior to their purchase. At the higher end of the spectrum, Hain Celestial's stock would be valued as high as $65, but the $55 to $60 range is a good starting point, according to Maxim.

Price Action

Shares of Hain Celestial were down 1.30 percent at $40.12 at the time of publication. The company is up 5 percent since the start of 2017.

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Latest Ratings for HAIN

DateFirmActionFromTo
Aug 2018Wells FargoMaintainsMarket PerformMarket Perform
Aug 2018BuckinghamMaintainsNeutralNeutral
Aug 2018JP MorganMaintainsNeutralNeutral

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