UPDATE: UBS Starts Vital Farms (VITL) at Buy

UBS analyst Cody Ross initiates coverage on Vital Farms (NASDAQ: VITL) with a Buy rating and a price target of $16.00.

The analyst comments "We initiate coverage on VITL with a Buy rating and a $16 price target. VITL primarily sells pasture-raised eggs, capitalizing on a shift in consumer preferences towards companies that focus on sustainability. There are three key reasons we believe there is a long runway of growth ahead for VITL: (1) pasture-raised eggs have 59% market share in the UK (albeit there are subsidies) compared to only 5% in the US, (2) VITL's Total Distribution Points (TDPs) are 25% below its closest competitor despite registering superior velocity, and (3) VITL has consistently increased HH penetration over the past 4 years, primarily driven by the high-end consumer. Overlay the opportunity for GM to improve on the back of price increases and economies of scale, coupled with increased leverage on SG&A as '21 and '22 were heavy investment years, and our EBITDA forecast is 11% higher than the Street in 2023E. Given our forecast for accelerating profit growth leading to an inflection in FCF generation, we believe this is an attractive entry point."

For an analyst ratings summary and ratings history on Vital Farms click here. For more ratings news on Vital Farms click here.

Shares of Vital Farms closed at $11.39 yesterday.

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