Analyst Bryan Spillane of Bank of America Securities reiterated a Hold rating on Vita Coco Company (COCO – Research Report), with a price target of $29.00.
Bryan Spillane’s Hold rating for Vita Coco Company is premised on an array of factors. The company’s third quarter adjusted EBITDA of $26.9 million surpassed both Bank of America’s estimate of $17.4 million and Visible Alpha consensus of $20.3 million. This outperformance was primarily attributable to higher-than-expected sales, superior gross margins, and lower SG&A than projected. Moreover, Vita Coco has decided to continue its private label supply agreement with a major customer, which it had previously planned to terminate in the fourth quarter. Consequently, the company has revised its FY23 financial outlook upwards following these better than expected results.
In addition, Spillane’s rating takes into account Vita Coco’s outlook for FY24. The company anticipates sales growth in the low single digits, with branded sales projected to rise by 8.0% and America private label sales expected to decrease by 15.0% year over year. Vita Coco also estimates that its gross margins will remain steady compared to FY23 levels, and it forecasts mid-teens adjusted EBITDA growth, implying significant SG&A leverage. Spillane has therefore adjusted his FY23, FY24, and FY25 EBITDA estimates upwards. However, he maintains a Neutral rating and a price objective of $29, citing that the EBITDA growth for the coming year will primarily be driven by SG&A leverage.
Spillane covers the Consumer Defensive sector, focusing on stocks such as Keurig Dr Pepper, Kellanova, and Kraft Heinz. According to TipRanks, Spillane has an average return of 2.6% and a 50.22% success rate on recommended stocks.
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Vita Coco Company (COCO) Company Description:
The Vita Coco Co Inc is a plant-based functional hydration platform. Its products include Vita Coco Coconut Water, Private Label including coconut water and oil, and Other including Runa and Ever & Ever product offerings, Vita Coco product extensions beyond coconut water, such as Vita Coco Sparkling, coconut milk products, and others.
Read More on COCO:
- Vita Coco (NASDAQ:COCO) Jumps on Higher Full-Year Outlook
- The Vita Coco Company Reports Third Quarter 2023 Financial Results
- Vita Coco has a ‘weak,’ ‘unethical’ supply chain, says Ragnarok Research
- The Vita Coco Company to Report Third Quarter 2023 Financial Results on October 31, 2023
- Vita Coco price target lowered to $29 from $32 at BofA
