Credit Suisse Reiterates an 'Underperform' on Dean Foods (DF); Margins Have Bottomed, but Likely to Remain Low

Credit Suisse reiterates an 'Underperform' on Dean Foods (NYSE: DF), raises PT from $7 to $11.

Credit Suisse analyst says, "Dean clearly exceeded our expectations, and management should be commended for finally stabilizing profit margins in a very difficult environment. In retrospect, we and the market were baking in too high of a risk of debt default earlier this year."

"With the stock now trading at $12 and 15x our 2012 estimate, its not the deep value idea it once was. The dairy industry remains structurally challenged by overcapacity and consumer demand continues to decline. In addition, Dean's strategy of bidding for volume at low returns indicates to us that it won't be easy to generate significant earnings upside from here."

"We are raising our 2Q and 2011 estimate to the low-end of management's guidance or $0.15 and $0.68 (old: $0.55), respectively. We are raising 2012/2013 EPS estimates to $0.80/$0.89 from $0.65/$0.71."

For more ratings news on Dean Foods click here and for the rating history of Dean Foods click here.

Shares of Dean Foods closed at $12.24 yesterday.

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