Credit Suisse Downgrades Amplify Snack Brands (BETR) to Neutral; Execution Missteps
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Credit Suisse downgraded Amplify Snack Brands (NYSE: BETR) from Outperform to Neutral with a price target of $13.00 (from $18.00) following Q3 execution missteps.
Analyst Robert Moskow commented, "We are lowering our rating on Amplify to Neutral and lowering our target price to $13/share. Amplify missed its 3Q expectations and guided down its forecast for 2016 significantly. Although the Skinny brand's sales growth remains robust (+23%), the company suffered through a series of execution missteps that will require bigger investments and cause profit margin dilution in 2017. In addition, the intensifying competitive landscape raises serious concerns about the sustainability of the growth rate domestically and in the UK market, where the newly acquired Tyrells business also faced near-term headwinds. We have lowered our 2016 and 2017 sales estimates to $271M and $399M and our EBITDA estimates to $84 and $116, respectively. Our 2017 EBITDA assumes $24M growth in the North American business, a $24M contribution from Tyrell’s and a $15M investment in the sales force and higher marketing spending. Our target price of $13 reflects a 12x EBITDA against our 2018 EBITDA estimate, which is in line with packaged foods peers."
Shares of Amplify Snack Brands closed at $13.47 yesterday.
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