On Monday, Deutsche Bank (ETR:DBKGn) maintained a Buy rating and a $90.00 price target on Sysco Corporation (NYSE:SYY) stock, a global leader in selling, marketing, and distributing food products. The endorsement comes ahead of the company's Investor Day event, scheduled to take place on May 22 at the New York Stock Exchange.
The financial institution anticipates that Sysco will present a long-term growth strategy that is both reasonable and achievable, aimed at strengthening investor confidence.
Expectations among investors are leaning towards guidance for mid-single-digit to high-single-digit EBITDA growth and high-single-digit to low-double-digit EPS growth.
Deutsche Bank suggests that the guidance may align with the lower end of investor expectations, considering a prudent approach amidst current macroeconomic uncertainties. The bank outlines a base case scenario that includes low-single-digit case growth, mid-single-digit sales growth, mid-single-digit EBITDA growth, and high-single-digit EPS growth for Sysco.
Sysco has previously indicated that it expects a higher tax rate and an increase in interest expenses for the fiscal year 2025. Therefore, it is unlikely that the company will set guidance above the high end of its fiscal year 2024 EPS growth forecast of 5-10%.
The bank concludes that while guidance at the lower end might initially seem underwhelming to some, it is a cautious strategy that could, if exceeded over time, strengthen the long-term positive outlook for Sysco.
InvestingPro Insights
As Sysco Corporation (NYSE:SYY) prepares for its Investor Day, investors are keenly observing the company's performance metrics. According to real-time data from InvestingPro, Sysco boasts a market capitalization of $37.8 billion and is trading at a P/E ratio of 18.43, which adjusts to 17.45 when considering the last twelve months as of Q3 2024. The company's PEG ratio during this period stands at 0.51, indicating potential value relative to its earnings growth.
An InvestingPro Tip that stands out for Sysco is its track record of dividend reliability, having raised its dividend for 8 consecutive years and maintained payments for 54 consecutive years. This demonstrates the company's commitment to returning value to shareholders and could be a reassuring factor for investors amidst current economic uncertainties.
Additionally, Sysco's revenue growth has been modest, with a 3.26% increase over the last twelve months as of Q3 2024. Gross profit margin during the same period was 18.53%, reflecting the company's ability to maintain profitability. These figures suggest a stable financial foundation as Sysco approaches its Investor Day with a strategy aimed at long-term growth.
For investors looking for a deeper dive into Sysco's financial health and future prospects, there are additional InvestingPro Tips available at https://www.investing.com/pro/SYY. These tips provide insights into the company's stock performance, industry position, and analysts' predictions. For those interested in accessing the full list of tips, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.