Bernstein initiates US Foods stock with Outperform rating on margin growth

Investing.com - Bernstein initiated coverage on US Foods (NYSE:USFD) with an Outperform rating and a $95.00 price target on Wednesday. The stock, currently trading at $76.26 with a market cap of $17.17 billion, has shown strong momentum with a 22.5% return over the past year. According to InvestingPro analysis, the company maintains a GOOD financial health score.

The research firm sees an underappreciated opportunity for US Foods to increase margins sustainably while growing its topline faster than the market in key areas.

Bernstein expects US Foods to achieve a 130 basis point EBIT margin improvement by fiscal year 2027, exceeding the consensus estimate of 100 basis points.

The firm believes this growth will be driven by vendor management optimization, lower indirect spend, and segment mix shifts toward private label and higher-margin businesses.

Bernstein projects US Foods will close its valuation gap compared to Sysco, modeling 12% adjusted EBITDA growth with an 11.3x EV/EBITDA NTM+1 multiple.

In other recent news, US Foods has reaffirmed its fiscal year 2025 guidance and long-range growth targets through 2027. The company maintained its outlook for 4% to 6% net sales growth, 9.5% to 12% adjusted EBITDA growth, and 19.5% to 23% adjusted diluted EPS growth for fiscal 2025. Guggenheim recently raised its price target for US Foods to $88 from $80, following the company’s second-quarter earnings report, which revealed a 4% sales growth and a 12% increase in EBITDA. Wells Fargo also increased its price target to $87 from $80, highlighting US Foods’ position as a share consolidator and its impressive share repurchase program. Piper Sandler raised its price target to $85 from $77, maintaining an Overweight rating on the stock. Meanwhile, Truist noted that food manufacturing inflation remains elevated, with a May-July 2025 average of 4.3%, significantly higher than the previous year’s average. These developments reflect the company’s ongoing efforts and market position in a challenging economic environment.

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