On Tuesday, BTIG updated its outlook on US Foods Holding Corp . (NYSE:USFD), increasing the price target to $62 from the previous $52 while maintaining a "Buy" rating on the stock. The firm highlighted that US Foods is poised for offensive play after years of disruptions, now showing the flexibility to meet long-term financial goals and deliver significant returns to shareholders.
The firm's analyst pointed to a combination of factors that are expected to drive consistent EBITDA growth and capital returns for US Foods. These include mid-single-digit volume growth, substantial cuts in indirect expenses, and reduced leverage. The analyst believes that these elements will contribute to the company's financial performance.
US Foods is anticipated to benefit from the persistent restaurant promotional environment, which is expected to bolster case volume growth through 2024. The analyst also forecasts that the company will continue, if not increase, its share repurchase activity as leverage is projected to approach 2.0x by the end of the year, with no immediate debt maturities on the horizon.
The firm's outlook suggests that a combination of sales and earnings drivers will sustain US Foods' momentum throughout the year. This momentum is expected to help the company to narrow the historical performance gaps with its competitors.
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