Canaccord Genuity Cuts Price Target to $65 Following United Natural Foods (UNFI) Loss of Albertsons Contract
Canaccord Genuity maintained a Buy rating on United Natural Foods (NASDAQ: UNFI), and cut the price target to $65.00 (from $71.00), following the loss of Albertsons business. The contract will be terminate on September 20th. Analyst Scott Winkle lowered revenue forecast by 4-5% to reflect the lost sales.
Winkle commented, "The loss of the Albertsons business comes on the heels of softer channel growth, which will undoubtedly shake investor confidence and impact valuation. The Albertsons loss is a reversal of fortune, as UNFI won the business 4 years ago and was clearly underbid by the former contract servicer who we suspect had more incentive to be aggressive with pricing. The recent win of $100 million in incremental business that began shipping a couple of weeks ago, is now not incremental, but rather a partial offset to the Albertsons loss. We maintain our BUY rating, assuming a correction at the open Tuesday. Our price target is reduced to $65 from $71 and our revenue/earnings forecasts are reduced by about 4-5%."
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Shares of United Natural Foods closed at $62.54 yesterday.