UBS Maintains a 'Neutral' on Ralcorp Holdings (RAH); Trimming Numbers After Q2 Miss

May 23, 2012 10:50 AM EDT
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Price: $89.98 --0%

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    2 Buy, 9 Hold, 1 Sell

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    Up: 30 | Down: 30 | New: 23
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UBS maintains a 'Neutral' on Ralcorp Holdings Inc. (NYSE: RAH) price target lowered from $78 to $75.

Analyst, David Palmer, said, "We are trimming our FY12e EPS from $3.99 to $3.48 (-33% YOY; cons $3.97) and PT to $75, in order to reflect volume deleverage and higher overhead costs. F2Q EPS of $ 0.72 (-50% YOY; UBS/cons $0.85) included a ~$0.07 tax rate benefit in 2Q. Gross margin declined 240bp as a result of a 4% volume decline and input cost pressure (e.g. durum wheat). However, much of the difference to our model was a result of overhead cost pressure (some temporary due to Post-spin)."

Palmer still thinks RAH will get its private label premium on future accretive acquisitions and growth can accelerate in FY13. Share repurchases should also offer downside protection for the stock.

For an analyst ratings summary and ratings history on Ralcorp Holdings Inc. click here. For more ratings news on Ralcorp Holdings Inc. click here.

Shares of Ralcorp Holdings Inc. closed at $69.42 yesterday.

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