On Friday, BMO Capital Markets maintained an Outperform rating on US Foods (NYSE:USFD) and raised the price target to $75.00 from the previous $62.00. The adjustment follows US Foods' report of a robust financial quarter, with significant growth in earnings before interest, taxes, depreciation, and amortization (EBITDA) and earnings per share (EPS).
The company's EBITDA saw a double-digit percentage increase, while EPS grew by approximately 20%. This performance comes despite some modest challenges and contrasts with the mixed results observed among US Foods' industry peers. The positive quarter was highlighted by the company's strong execution of its initiatives and an acceleration of trends in the fourth quarter to date.
The analyst from BMO Capital Markets emphasized the strength of US Foods' quarterly results and the momentum of the company's ongoing initiatives. The analyst's outlook suggests a growing investor confidence in US Foods' multi-year plan, which is expected to continue supporting the company's recent valuation gains and potentially lead to further expansion.
The raised price target to $75 reflects the analyst's belief in the potential for US Foods' stock value to climb, as the company continues to execute its strategic plan effectively. The Outperform rating indicates that BMO Capital Markets expects US Foods to perform better than the overall market or its sector in the foreseeable future.
In other recent news, U.S. Foods Holding Corp has reported a strong third-quarter performance with net sales rising 6.8% to $9.7 billion. This growth was driven by a combination of increased case volume and food cost inflation. The company's adjusted EBITDA grew by 13.2% to $455 million, and adjusted diluted EPS increased by 21.4% to $0.85.
U.S. Foods also repurchased $580 million in shares during the quarter and launched the Pronto delivery service in 40 markets, projecting nearly $700 million in annualized sales. The company expects to achieve over $230 million in cost savings through vendor management by year's end.
Looking ahead, U.S. Foods anticipates 2024 net sales between $37.7 billion and $38 billion. Adjusted EBITDA is projected to be between $1.72 billion and $1.74 billion, with adjusted diluted EPS ranging from $3.05 to $3.15. Despite some challenges, the company maintains a positive outlook, supported by a solid pipeline for new business and operational efficiencies.
InvestingPro Insights
US Foods' strong financial performance, as highlighted in the BMO Capital Markets report, is further supported by recent InvestingPro data. The company's revenue for the last twelve months as of Q3 2024 stood at $37.32 billion, with a growth rate of 6.1%. This aligns with the analyst's observations of robust financial results.
InvestingPro Tips reveal that US Foods has shown a significant return over the last week, with data indicating an 8.33% price total return in the past week. Moreover, the company has demonstrated a strong return over the last three months, with a impressive 29.72% price total return. These metrics underscore the positive momentum mentioned in the analyst report and suggest growing investor confidence in US Foods' strategy.
It's worth noting that US Foods is trading near its 52-week high, with its current price at 98.89% of the 52-week high. This information, combined with the analyst's raised price target, indicates potential for further growth. However, investors should be aware that the stock's RSI suggests it may be in overbought territory, which could warrant careful consideration.
For readers interested in a more comprehensive analysis, InvestingPro offers 12 additional tips for US Foods, providing a deeper understanding of the company's financial health and market position.
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