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Pinnacle Reaches New Heights, Gets A Buy Rating From Stifel

Pinnacle Foods Inc PF 1.71% reported another quarter of solid results and raised its guidance. The company would likely continue outperforming the food industry, Stifel’s Christopher R. Growe said in a report. He upgraded the rating on Pinnacle from Hold to Buy, while establishing a price target of $55.

Outlook Conservative

Pinnacle raised its EPS guidance for FY16 from $0.02-$0.03 to $2.10-$2.15, representing EPS growth of 9-12 percent.

Analyst Christopher Growe commented that while the outlook was strong, it seemed conservative. He explained, “We believe the increase in guidance is tied entirely to the upside experienced year-to-date, with no significant change in the outlook for the balance of the year despite improving business momentum.”

Accelerating Growth

Pinnacle’s growth appears to be accelerating and the company would likely continue to outperform the food industry, backed by a stronger portfolio that was “capable of enhancing its long-term sales and EPS growth,” Growe mentioned.

“Pinnacle’s higher growth platforms are gaining critical mass, slower growth items are showing sequential improvements, while continued mix benefits, productivity, and synergies are elevating the margin thus the overall profit growth potential of the business,” the Stifel report added.

The analyst believes that the strong growth characteristics of Pinnacle’s core business as well as the optionality in its business, including M&A, “provides the backdrop for continued upside” for the company’s shares.

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Jul 2016Stifel NicolausUpgradesHoldBuy
Jul 2016UBSMaintainsNeutral
Jul 2016Deutsche BankMaintainsHold

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