Piper Jaffray reiterated a Neutral rating on United Natural Foods (NASDAQ: UNFI), and raised the price target to $33.00 (from $31.00), following the company's 2Q earnings report. Margins were down 63bp year over year. The combination of competitive pricing pressures, fuel, FX, lower inflation and fewer supplier promos in the quarter all attributed to margin declines. However, the results also showed very strong improvements in free cash flow.

Analyst Sean Naughton commented, "Last night, UNFI reported its full results after pre-announcing sales and earnings below expectations last Monday. The results showed very strong improvements in free cash flow, but also highlighted challenging margin issues that may persist. While the stock's valuation and company operating margin are well below historical averages, we find catalysts are lacking near-term. We would look to get more constructive on shares again if organic growth accelerates and/or margins can stabilize."

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Shares of United Natural Foods closed at $36.26 yesterday.