Analyst Peter Galbo of Bank of America Securities reiterated a Hold rating on UTZ Brands (UTZ – Research Report), with a price target of $19.00.
Peter Galbo has given his Hold rating due to a combination of factors influencing UTZ Brands’ financial outlook and strategic moves. The company’s recent announcement of a definitive agreement to sell certain assets, including Good Health and R.W. Garcia brands along with three manufacturing facilities, is expected to be earnings per share (EPS) accretive for the fiscal year 2024. This move is anticipated to fast-track the company’s cost savings initiatives, pulling forward the benefits from fiscal year 2026 to 2025, although the fiscal year 2024 remains unchanged. Moreover, the proceeds from the sale are slated for immediate debt reduction, thereby lowering interest expenses and accelerating UTZ’s debt leverage goal by a year. Galbo sees these strategic decisions as a positive step for the company’s financial health, which justifies a higher price objective and a slight increase in the estimated valuation multiple.
Yet, despite these potentially beneficial developments, UTZ has also reported preliminary financial results for the fourth quarter of 2023 that were somewhat mixed, with sales not meeting expectations and a slight improvement in adjusted EBITDA. UTZ subsequently revised its full-year net sales forecast downwards while slightly narrowing its adjusted EBITDA outlook. These financial revisions, alongside the anticipated benefits from the asset sale, lead Galbo to maintain a Neutral stance on the stock. The Hold rating reflects a cautious optimism, recognizing the company’s proactive steps to improve its financial structure but also acknowledging the near-term challenges it faces in terms of sales performance.
Galbo covers the Consumer Defensive sector, focusing on stocks such as UTZ Brands, Conagra Brands, and JM Smucker. According to TipRanks, Galbo has an average return of 3.6% and a 49.47% success rate on recommended stocks.
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UTZ Brands (UTZ) Company Description:
Collier Creek Holdings is a blank check company, which engages in effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. The company was founded by Roger K. Deromedi, Jason K. Giordano, and Chinh E. Chu on April 30, 2018 and is headquartered in New York, NY.
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