UPDATE: UBS Starts Performance Food Group (PFGC) at Buy
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UBS analyst Mark Carden initiates coverage on Performance Food Group (NYSE: PFGC) with a Buy rating and a price target of $62.00.
The analyst comments "We initiate coverage of PFGC with a Buy rating. PFGC has access to one of the largest addressable markets in distribution with scale in traditional foodservice (~8% share) & c- stores (~20% share). Importantly, PFGC's pullback following its CORE acquisition news provides an attractive point of entry, in our view. We understand fears that this could push foodservice M&A down the road. Still, CORE provides wider access to c-stores, has historically traded at similar ROAICs & EV/EBITDAs as PFGC (see analysis on p. 26), & offers an opportunity to cross-sell foodservice products into c-stores. Longer term, we expect PFGC to build out a national foodservice footprint, allowing it to close the gap in restaurants served relative to SYY & USFD (see UBS Evidence Lab work on pp. 9-10, >Access Dataset). Further, our quartile analysis suggests PFGC has previously performed best in periods where food inflation has been highest. These factors all suggest it can still support an 11x multiple, which is in line with its 5 year average."
Shares of Performance Food Group closed at $45.48 yesterday.
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