RBC Capital Cuts PT on United Natural Foods (UNFI) Post Q1; Guidance Still Too Ambitious
RBC Capital maintained an Underperform rating on United Natural Foods (NASDAQ: UNFI), and cut the price target to $42.00 (from $46.00), following the company's 1Q16 earnings report. UNFI reported adjusted EPS of $0.63 on $2.08bn of revenue, compared to consensus estimates of $0.68 and $2.08bn. Organic sales growth of +6.8% was below consensus estimates of +7.6%. RBC still believes that full year guidance, which implies an adjusted net sales acceleration, is too ambitious.
Analyst William Kirk commented, "We still believe full year guidance, which implies an adjusted net sales acceleration, is too ambitious. Additionally, company commentary conceded that gross margins will not grow. While UNFI expects this period of supplier price competition to abate, we believe it is the beginning of a long process toward conventional wholesaler margins. We are lowering our numbers and price target to $42 (from $46)."
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Shares of United Natural Foods closed at $44.03 yesterday.