Boulder Brands (BDBD) Struggle To Generate Consistent Results; Imperial Capital Cuts Price Target
Imperial Capital maintains an Outperform rating on Boulder Brands (NASDAQ: BDBD), and cut the price target to $12.00 (from $15.00), following the June 10th pre-announcement and resignation of CEO Steve Hughes. Analyst Mitchell Pinheiro believes that the company's struggle to generate consistent results is due to BDBD's singular focus and dependence on distribution gains.
Pinheiro commented, "We are maintaining our Outperform rating and are lowering our one-year price target to $12 from $15 on BDBD shares. Our price target is about 75% above the recent share price. Our Outperform rating is based on our longer-term view that BDBD has built an attractive portfolio of cross-channel and cross-category brands that would be attractive to the larger, slower growing packaged food companies that are looking to replace growth in their declining brands. The company’s earnings preannouncement on 6/10/15, along with the resignation of CEO Steve Hughes, highlights the company’s struggle to generate consistent results, which we believe are largely the result of the company’s singular focus and dependence on distribution gains, at the expense of marketing and sales velocity with current customers. We believe the inconsistent results also supports our view that BDBD’s brands are likely better managed by more sophisticated brand managers with deeper pockets capable of supporting both marketing and manufacturing investments. The bad news from a stock
perspective is that BDBD’s transition will likely take at least six to 12 months and involve higher marketing spending. That said, while short-term earnings power has been impaired, we believe the brands’ value remain unaffected. Udi’s, EVOL, and Earth Balance remain strong Millennial-favored brands and conventional grocers are looking to these brands to attract this new, influential demographic."
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Shares of Boulder Brands closed at $6.83 yesterday.