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WhiteWave Foods Downgraded At Morgan Stanley As Danone Deal Approaches

With the acquisition of WhiteWave Foods Co WWAV by Danone SA (ADR) DANOY fast approaching its completion date, Morgan Stanley’s Matthew Grainger believes a higher offer is unlikely to materialize.

Grainger downgrading the rating on WhiteWave Foods from Overweight to Equal-weight, with a price target of $56.25.

Q2 Results

The company reported its Q2 results, with organic sales slightly below the estimate, with North America being pressured by temporary service disruptions at So Delicious, pricing benefits at Horizon milks and ongoing supply shortages in organic salads.

The EPS for the quarter came in at $0.32, beating the consensus and the estimate, driven by robust operating margin expansion.

Guidance

WhiteWave Foods also reaffirmed its top line guidance, while raising the currency neutral EPS guidance, to reflect the margin upside during Q2.

“WWAV reiterated its outlook for HSD organic sales growth for the full-year, implying an acceleration to 9-12 percent growth during the second half driven by the inclusion of Vega into organic sales, solid volume growth across its existing portfolio, and a recovery at Fresh Foods,” Grainger mentioned.

Acquisition Agreement

The company had entered into a definitive agreement with Danone on July 6, to be acquired for $56.25 per share.

WhiteWave Foods reaffirmed that the transaction was expected to close by the end of 2016.

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DateFirmActionFromTo
Aug 2016DA DavidsonDowngradesBuyNeutral
Aug 2016CLSADowngradesOutperformUnderperform
Aug 2016Morgan StanleyDowngradesOverweightEqual-weight

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