Pivotal Research Starts United Natural Foods (UNFI) at Sell

Pivotal Research initiated coverage on United Natural Foods (NASDAQ: UNFI) with a Sell rating and a price target of $36. Analyst Ajay Jain thinks growth is tarnished and said the company's issues extend well beyond the termination of Albertson’s agreement.

"The biggest concern we have at this time is the continued decline in endmarket growth across each of the major customer segments. The organic growth rate across all segments has declined sharply throughout FY15 and we believe comps at Whole Foods have potential to turn negative in 1Q16," said Jain.

"We’re also cautious regarding the potential for further setbacks in the conventional supermarket channel following the planned exit of Albertson’s on 9/20/15. The Independent channel (32% of sales) also appears to be struggling with low single-digit organic sales growth. While all these issues have been well documented, the potential for operating inefficiencies in FY16 and negative leverage may still not be fully appreciated by the Street. Against the backdrop of broad-based sales weakness, we think it’s appropriate to be cautious in our outlook," added the analyst.

For an analyst ratings summary and ratings history on United Natural Foods click here. For more ratings news on United Natural Foods click here.

Shares of United Natural Foods closed at $49.60 yesterday.

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