Credit Suisse Downgrades TreeHouse Foods (THS) to Neutral
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Credit Suisse analyst Robert Moskow downgraded TreeHouse Foods (NYSE: THS) from Outperform to Neutral with a price target of $52.00 (from $48.00).
The analyst commented, "We are lowering our rating on TreeHouse to Neutral and raising our target price to $52/share from $48/share. We view activist investment firm JANA’s involvement as a positive for the stock because it will increase management’s sense of urgency to improve execution internally, optimize its portfolio, and perhaps even pursue a sale of the company longer term. But as management itself can attest, there is no silver bullet to “fix” the business through self-help, and we view the pool of potential buyers for this business as relatively small. Guidance from management indicates a challenging year ahead due to difficult comparisons to last year’s pantry loading, cost inflation of $100-$110M (about 3.1% of COGS) that will require pricing actions to offset, and lack of urgency from consumers to trade down to private label while receiving government support payments. Retailers sound eager to increase their private label merchandising in 2021, but as CEO Steve Oakland says, “it doesn’t happen overnight.”"
Shares of TreeHouse Foods closed at $49.28 yesterday.
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