KeyBanc Upgrades Flowers Foods (FLO) to Buy, To Benefit from Liquidation of Hostess

November 19, 2012 6:45 AM EST
Get Alerts FLO Hot Sheet
Price: $19.80 +0.81%

Rating Summary:
    5 Buy, 8 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 30 | Down: 30 | New: 23
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KeyBanc upgraded Flowers Foods (NYSE: FLO) from Hold to Buy with a price target of $25.00.

The firm comments, "We have always viewed Flowers Foods, Inc. (FLO) as one of the best operators in the bakery business and continue to have a favorable view of the management team. However, we had an unfavorable view of the bakery industry owing to concerns regarding overcapacity, high input costs, and declining volume trends. As such, we did not feel it was justified to recommend investors to buy FLO. We now have a favorable view of the bakery industry - specifically, we expect the industry profit pool to expand owing to the expected liquidation of Hostess Brands, and believe FLO will get at least its fair share of the expanding profit pool. Furthermore, FLO could also benefit from share gains (sales growth - either organic or by acquisition) as a result of the aforementioned liquidation."

The firm is are increasing 2013 EPS estimate from $1.05 to $1.10 to reflect our more positive stance on gross margins.

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

Shares of Flowers Foods closed at $22.32 yesterday.

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