KeyBanc Starts Dean Foods (DF) at Buy

March 4, 2013 7:46 AM EST Send to a Friend
Get Alerts DF Hot Sheet
Price: $14.40 --0%

Rating Summary:
    6 Buy, 8 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 14 | Down: 29 | New: 2
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KeyBanc initiates coverage on Dean Foods (NYSE: DF) with a Buy. PT $21.00.

The firm comments, "Adjusted for its ownership stake in WWAV, DF is trading at a significant discount to its peers (3.5x EV/EBITDA compared to about 7x for its agribusiness peers), which we think is unwarranted. Given DF's stable free cash flow (FCF) generation, transformation of balance sheet to a position of strength (2x levered after adjusting for DF's ownership stake in WWAV after adjusting for the sale compared to over 3x before), and relatively stable nature of the milk category (compared to agribusiness sector), we believe DF could trade at an EV/EBITDA multiple that is at least in line with its agribusiness peers. We believe the planned split of a significant portion of its ownership in WWAV (expected by May 2013) and the sale of its remaining stake in WWAV (worth about $560 million today) will be the catalysts that will start the "re-rating" of DF."

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 $16.92 yesterday.


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