Imperial Capital Upgrades Lifeway Foods (LWAY) to Outperform

Imperial Capital upgraded Lifeway Foods (NASDAQ: LWAY) from In-Line to Outperform with a price target of $22.00 (from $17.00), suggesting 22% upside from recent levels.

Analyst Mitchell Pinheiro commented, "Our more positive stance on LWAY is predicated on continued mid-teen revenue growth (new distribution, new products, consumption gains) and strong margin expansion related to the significant decline in Class II milk prices (currently -35% yoy). We are increasing our 2015 EPS estimate to $0.55 from $0.51 to reflect a more favorable gross margin from lower milk costs, increased internal milk processing and continued SG&A leverage. We remain positive on LWAY’s leadership in the kefir and probiotics category and expect strong consumer demand for dairy-based probiotics. New branded competitors in the category may be the most significant risk to the top line, but Lifeway remains the dominant and most innovative company in the category. The stock now trades at a more reasonable 14.4x our 2015 EBITDA estimate and our $22 price target implies a 15.5x forward multiple, levels that we believe are reasonable and attainable. We believe our 2015 estimate has upside on both revenue and margins and believe the risk/reward is favorable at current levels. "

For an analyst ratings summary and ratings history on Lifeway Foods click here. For more ratings news on Lifeway Foods click here.

Shares of Lifeway Foods closed at $17.97 yesterday.

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