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JPMorgan started off coverage Post Holdings (NYSE:POST) on Friday with an Overweight rating.
Analyst Ken Goldman said that although Post Holdings (POST) is not a pure growth story, the food company is seen having many ways to drive longer-term margin expansion and shareholder value.
Goldman and team believe that over the next few years, the combination of general margin and EBITDA improvement, debt paydown, and share repurchases will lead to outsized upside for Post Holdings (POST) in comparison to peers.
"Though Post is not necessarily the fastest growing company in our coverage, it is a unique story within packaged food—in terms of its efforts to be a publicly traded private equity-type company—and management has done a good job over the years in creating shareholder value."
Without having M&A in the mix, Post Holdings (POST) is expected to apply a great deal of operating cash to debt paydown and share buybacks. The shareholder-friendly uses of cash are some of the main drivers of JPMorgan's optimism that the fair value for the POST shares will expand over the next year or two.
JPMorgan set a December 2024 price target of $100 on POST, based on 9.0X multiple of the 2025 EBITDA estimate.
Shares of Post Holdings (POST) moved 0.53% in premarket action to $80.04 vs. the 52-week trading range of $78.85 to $98.84.