Piper Jaffray Increases Estimates/Price Target on SYSCO (SYY) to $36

July 7, 2008 8:50 AM EDT

Piper Jaffray raises their price target on SYSCO (NYSE: SYY) from $34 to $36 and maintains their Buy rating. The firm increases their 4Q08 EPS estimate from $0.51 to $0.53, on higher sales growth, and increases their FY09 EPS estimate from $1.92 to $1.97. SYY remains Piper Jaffray's top large cap pick.

The firm said, “This tough economic period allows SYY the opportunity to differentiate itself and take market share. Gains in market share will most likely come through attrition and acquisitions instead of proactive pricing strategy. SYY enjoys the benefit of a diversified geography and customer base. We believe high inflation amidst slow same-store sales growth benefits SYSCO at the expense of peers. In the absence of the ability of restaurants to pass along higher prices, operators must find ways to reduce costs to remain profitable. Initiatives such as business reviews allow SYY to work directly with restaurants to find ways to be proactive in offering customers options that reflect the economic environment without sacrificing margin at the restaurant. The incremental sales are likely to add market share for SYY allowing the company to continue to grow faster than the market."

SYSCO Corporation, through its subsidiaries, engages in the marketing and distribution of a range of food and related products primarily for the foodservice industry in the United States and Canada.

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