Whole Earth Brands Inc. (FREE) Management Meetings Show Market Discount is Too Great, Jefferies Reiterates Buy
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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".
Shares of Whole Earth Brands Inc. closed at $13.58 yesterday.
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