Flowers Foods (FLO) PT Raised to $23 at Deutsche Bank

Deutsche Bank analyst Steve Powers raised the price target on Flowers Foods (NYSE: FLO) to $23.00 (from $22.00) while maintaining a Hold rating.

The analyst comments "We see FLO well positioned for a solid and potentially positive quarter, driving us to raise our 1Q and FY24 estimates slightly above consensus. That said, we believe the market's expectations are already implicitly high as well—noting ~10% price appreciation in FLO's shares over the past month. Fuelling our (and we believe the market's) relative optimism has been consistent and constructive consumption data, with US tracked channel sales growing +2.8% YOY in 1Q (vs. +1.2% in 4Q23), with volumes close to ~flat and market share up ~+1 point versus the year-ago period. In addition, cost savings initiatives and moderating input inflation should benefit gross margins and enable planned growth investments. Of course, untracked channel dynamics, timing factors, and/ or fluctuations in FLO's difficult-to-model non-branded business amidst ongoing business exits could drive deviations in anticipated top-line performance, and higher labor, maintenance, and/or ERP costs could eat into bottom-line flowthrough. Nonetheless, with 1Q being FLO's largest quarter (16 weeks on the fiscal calendar), we expect a solid start to FY24—noting that management's full-year guidance (EPS of $1.20-$1.30) already theoretically embedded allowances for "more caution on the back half, largely due to the uncertain consumer and promotional environment." Our FY1Q EPS estimate moves to $0.41 from $0.40 (Street: $0.40), while our fullyear EPS forecast rises to $1.25 from $1.23 (Street: $1.24) and our price target moves to $23 (from $22)."

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