Piper Jaffray Cuts Price Target on United Natural Foods (UNFI) to $67 Following Albertson's Contract Termination
Piper Jaffray reiterated an Overweight rating on United Natural Foods (NASDAQ: UNFI), and cut the price target to $67.00 (from $80.00), following the reported contract termination of one of the company's largest customers, Albertson's. Analyst Sean Naughton thinks that the contract is worth $0.14/share.
Naughton commented, "Earlier today, UNFI reported a contract termination with one of its largest customers, Albertson's. The contract will be about $410M in total revenue for UNFI in FY15 (July YE) and if we apply the overall company net income margin to the business, we think it is worth about $0.14/share on a trailing 12 month basis. While UNFI's business continues to come under pressure, we continue to recommend owning shares as we do believe there is still nice growth in this business and the company has a very sophisticated network of assets that would be difficult to disintermediate. We are taking our multiple down on the shares from 25x to 20x and believe 20x is still fair as estimates will continue to get revised lower."
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Shares of United Natural Foods closed at $62.54 yesterday.