Whole Earth Brands Inc. (FREE) Management Meetings Show Market Discount is Too Great, Jefferies Reiterates Buy

March 19, 2021 8:27 AM EDT
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Price: $13.22 -0.83%

Rating Summary:
    5 Buy, 0 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 10 | Down: 11 | New: 50
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Jefferies analyst Rob Dickerson reiterated a Buy rating and $22.00 price target on Whole Earth Brands Inc. (NASDAQ: FREE) after hosting the management team for a series of investor meetings and walking away believing the growth profile inappropriately discounted.

The analyst stated "Coming out of our hosted investor meetings yesterday with Whole Earth’s CEO & CFO, we’re reiterating our Buy rating, driven by the company’s growth profile/potential vis-à-vis valuation. The company upped its LT org. sales and EBITDA growth guidance this week to MSD (from prior LSD-to-MSD) and MSD-to-HSD (from prior MSD), respectively, driven by visibility around new U.S. retail business win potential, non-US expansion, and foodservice upside. During our meetings, mgmt. spoke on new business
wins expected later this year given positive shelf reset probability and the potential to enter larger foodservice players with a natural sweetener offering (similar to Whole Earth at Starbucks), all the while reiterating non-U.S. expansion growth as it enters China and India and leverages its larger global footprint. Mgmt. stated that its natural sweetener business should grow revenues per year over the next 3-5 years at a HSD rate, while the rest of its business, including its B2B Flavors & Ingredients platform, should grow LSD
organically, getting it to MSD all in, excluding acquisitions, which could include close-in sweetener options and/or adjacency plays in the broader free-from arena such as baking mixes, sugar-free confectionery, and the like. At ~8x our 2022 EBITDA forecast, we still view FREE as a great bargain, given organic top-line and EBITDA growth trajectory (as we detailed in our February initiation) relative to peers and its implied ~35% valuation discount".

For an analyst ratings summary and ratings history on Whole Earth Brands Inc. click here. For more ratings news on Whole Earth Brands Inc. click here.

Shares of Whole Earth Brands Inc. closed at $13.58 yesterday.

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