Why Did Pivotal Research Upgrade United Natural Foods’ Stock?


In a report released today, Ajay Jain from Pivotal Research upgraded United Natural Foods (UNFI) to Hold, with a price target of $14. The company’s shares closed yesterday at $13.68, close to its 52-week low of $13.64.

Jain noted:

“We’ve reduced our price target accordingly to $14 (from $18) and move to a HOLD. Worse case scenarios still exist, however. If the supply agreement for Whole Foods doesn’t get renewed in 2025 (or significant pricing concessions are made), UNFI could be a potentially un-investable stock. In relation to the Supervalu transaction, there is still a great deal of variability around the price target based on rapidly shrinking levels of EBITDA and very high debt levels. Relative to our FY19 estimates, leverage is 5.8x EBITDA. Based on comparable assumptions, FY19 EBITDA guidance has already been reduced by at least 15% from the initial range that was provided just a few months ago. A further 10% hit to FY19 EBITDA would result in a $6 price target based on a target multiple of 7.0x EV/EBITDA.”

According to TipRanks.com, Jain is a 5-star analyst with an average return of 12.9% and a 61.4% success rate. Jain covers the Services sector, focusing on stocks such as Walgreens Boots Alliance, Performance Food Group, and US Food Holdings Corp.

The word on The Street in general, suggests a Hold analyst consensus rating for United Natural Foods with a $24.25 average price target, a 77.3% upside from current levels. In a report issued on November 28, Cleveland Research also maintained a Hold rating on the stock.

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The company has a one-year high of $52.55 and a one-year low of $13.64. Currently, United Natural Foods has an average volume of 1.69M.

Based on the recent corporate insider activity of 55 insiders, corporate insider sentiment is negative on the stock.

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United Natural Foods, Inc. engages in the distribution of natural, organic, and specialty foods and non-food products. It operates through the Wholesale and Other segment. The Wholesale segment distributes nutritional supplements, personal care items and organic products. The Others segment includes the sale other activities of the firm.

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