UPDATE: Bernstein Downgrades Dean Foods (DF) to Market Perform

(Updated - January 19, 2017 7:56 AM EST)

Bernstein downgraded Dean Foods (NYSE: DF) from Outperform to Market Perform with a price target of $22 (unchanged).

Analyst Alexia Howard comments "Dean Foods' stock price has performed strongly in recent months. While some of this may be attributed to the fact that Dean Foods could be one of the biggest beneficiaries of any reduction in the corporate tax rate in the US under the Trump administration (we estimate that EPS could be boosted 19% by a reduction from 35% to 17.5%, even if interest payments are no longer deductible), it appears that some expectation about dealmaking could be supporting the stock price at present. The problem here is that the Walmart uncertainty is unlikely to be resolved one way or another over the next 18 months which is likely to constrain valuation to already subdued levels. And the fundamental outlook now seems to be deteriorating with rising milk input costs and declining sales of branded milk, as well as signs of strain between retailers and manufacturers around pricing levels and promotional activity. We therefore no longer believe that the fundamental outlook warrants an outperform rating and are therefore downgrading the stock from outperform to market-perform and maintaining our target price at $22."

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

Shares of Dean Foods closed at $21.31 yesterday.

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