What Made Pivotal Research Downgrade United Natural Foods’ Stock?

By Austin Angelo

In a report released today, Ajay Jain from Pivotal Research downgraded United Natural Foods (UNFIResearch Report) to Sell, with a price target of $8. The company’s shares closed yesterday at $13.73, close to its 52-week low of $9.23.

Jain observed:

“We’ve lowered our FY19 EBITDA est. from $598 million to $527 million. The latest operational challenges are specific to several acquired facilities in the legacy Supervalu distribution network. There were some positives in 2Q including $200 million of new business and $165 million in debt reduction. Still, the rapid succession of the recent guidance cuts confirms many of our initial concerns about Supervalu, including the fact that UNFI has acquired a business that was itself undergoing major transitional issues following several recent acquisitions with unfinished integration work.”

According to TipRanks.com, Jain is a 4-star analyst with an average return of 12.3% and a 57.5% success rate. Jain covers the Services sector, focusing on stocks such as Walgreens Boots Alliance, Performance Food Group, and US Food Holdings Corp.

The word on The Street in general, suggests a Hold analyst consensus rating for United Natural Foods with a $18.33 average price target.

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Based on United Natural Foods’ latest earnings release for the quarter ending January 31, the company reported a quarterly GAAP net loss of $342 million. In comparison, last year the company had a net profit of $50.49 million.

Based on the recent corporate insider activity of 45 insiders, corporate insider sentiment is positive on the stock. This means that over the past quarter there has been an increase of insiders buying their shares of UNFI in relation to earlier this year.

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