United Natural Foods Receives a Sell from Pivotal Research

Pivotal Research analyst Ajay Jain assigned a Sell rating to United Natural Foods (NASDAQ: UNFI) yesterday and set a price target of $32. The company’s shares closed yesterday at $49.41, close to its 52-week high of $52.69.

Jain wrote:

“We reiterate our SELL ahead of the print. Our EPS est. of $0.55 for 1Q18 is $0.05 below consensus. Following a year that was heavily impacted by acquisitions, beginning in 1Q18 revenues will directly reflect underlying organic growth trends. Additionally, earnings will need to stand on their own without adjustments for merger/integration expenses and restructuring charges. At a forward EV/EBITDA multiple of 9x, UNFI remains one of the most expensive stocks in our coverage. While we are below the FY18 guidance range at $2.54, the $2.67-$2.77 guidance assumes EPS growth of just 4-8%. This reflects a lack of leverage off of relatively soft top-line trends of just 4%. Even if the FY18 guidance is viewed as achievable, the stock is significantly disconnected from deteriorating growth and margin trends. There is also a further disconnect between the post 4Q17 stock performance and what we view as a growing bear case.”

According to TipRanks.com, Jain is a 2-star analyst with an average return of 0.8% and a 44.6% success rate. Jain covers the Services sector, focusing on stocks such as Walgreens Boots Alliance, Performance Food Group, and US Food Holdings Corp.

United Natural Foods has an analyst consensus of Hold, with a price target consensus of $39.60.

Based on United Natural Foods’ latest earnings report for the quarter ending July 31, the company posted quarterly revenue of $2.34 billion and quarterly net profit of $38.87 million. In comparison, last year the company earned revenue of $2.28 billion and had a net profit of $29.22 million.

Based on the recent corporate insider activity of 57 insiders, corporate insider sentiment is negative on the stock. Most recently, in October 2017, Peter Roy, a Director at UNFI sold 2,660 shares for a total of $107,544.

TipRanks has tracked 36,000 company insiders and found that a few of them are better than others when it comes to timing their transactions. See which 3 stocks are most likely to make moves following their insider activities.

United Natural Foods, Inc. engages in the distribution of natural, organic, and specialty foods and related products. It operates through the Wholesale and Other segments. The Wholesale segment distributes nutritional supplements, personal care items and organic products. The Others segment engages in other activities of the firm.

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