KeyBanc Initiates Covearge on Flowers Foods (FLO) with a Buy
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KeyBanc initiates covearge on Flowers Foods, Inc. (NYSE: FLO) with a Buy. Price target $27.
KeyBanc analyst says, "The Company is one of the lowest cost producers in the bakery industry, has structurally higher margins than its peers, has been gaining share consistently for the past decade and has a very conservative balance sheet. This strategy has generated an enviable 20% EPS CAGR over the last five years, despite strong commodity headwinds. With tremendous flexibility on its balance sheet, we expect FLO to post 24% EPS growth in 2009. This EPS growth, combined with a roughly 3% dividend yield, should translate into mid double-digit returns for investors. As such, we apply a 9x multiple to our forward 12-month EBITDA projection of $312 million to get to our price target of $27, which implies 16% upside from current levels. Higher wheat costs, pricing deflation and a more competitive environment are the biggest risks that could impede the shares from achieving our price target."
Flowers Foods, Inc. (Flowers Foods) is a producer and marketer of bakery products in the United States.
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