SOVO's Diversified Portfolio Poised For Growth Amid Rising Interest In BFY Products, Analyst Predicts

Stephens & Co. analyst Jim Salera initiated coverage of Sovos Brands Inc SOVO at an Overweight rating with a price target of $23. 

The analyst sees the company's Rao's Italian pasta sauces product portfolio (around 2/3 of sales) as the key growth driver, with impressive market share gains in all the categories amid the pandemic.

Apart from this, Salera believes SOVO's diversified portfolio is well-positioned to capitalize on consumers' increased interest in BFY products.

The analyst sees SOVO's expansion opportunity across products such as frozen pizza. 

The analyst estimates FY23 sales of $953.5 million (consensus: $950.6 million), adjusted EBITDA of $141.0 million (consensus: $138.6 million), and adjusted EPS of $0.63. 

For FY24, Salera estimates sales of $1.04 billion (consensus: $1.03 billion), adjusted EBITDA of $158.1 million (consensus: $150.8 million), and adjusted EPS of $0.74.

Price Action: SOVO shares are trading higher by 5.18% at $19.71 on the last check Friday.