Jefferies Reiterates Buy on ConAgra Foods (CAG)

Jefferies reiterated a Buy rating and $50.00 price target on ConAgra (NYSE: CAG) reflecting the Lamb Weston spin-off, margin improvement, and cash returns. Assuming a discount rate of 6%, 5 years to discount FCF and 2.5 years for asset sales, Jefferies estimates the net present value of the aforementioned levers to be $28/ share.

Analyst Akshay Jagdale commented, "All in, we see ~$42/share in LT value-creation opportunity from 4 levers: 1) Lamb Weston spin-off (+$7/share – values business at 13x EV/EBITDA vs. 11.5x today); 2) margin improvement in legacy CAG brands (+$14/share); 3) cash returned from asset sales using capital loss carry forward ($12/share); and 4) cumulative FCF after dividends available for shareholders (+$9/share)."

For an analyst ratings summary and ratings history on ConAgra click here. For more ratings news on ConAgra click here.

Shares of ConAgra closed at $40.36 yesterday.

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