Jefferies reiterated a Buy rating on Dean Foods (NYSE: DF), and raised the price target to $23.00 (from $21.00), following the company's 4Q. Jefferies increased normalized EBIT/gal estimates to $0.12 (from $0.11/gal), given better than expected 2015 results and Jefferies' view that there is still plenty of opportunity to lower SG&A/gal.

Analyst Akshay Jagdale commented, "We believe there are three compelling reasons to own the stock: 1) gross margin improvement opportunity (still in middle innings); 2) significant opportunity exists to unlock value from DF’s underutilized & relatively inefficient distribution network; & 3) under-levered B/S means ~$150M/yr normal FCF available to shareholders. 4Q results bolster our view on margins. We are raising our normalized EBITDA estimate and, as a result, our PT is increasing to $23."

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Shares of Dean Foods closed at $18.88 yesterday.