BMO maintains CHEF stock Outperform with $73 target

On Wednesday, BMO Capital Markets sustained its positive outlook on The Chefs’ Warehouse, Inc (NASDAQ:CHEF), reaffirming an Outperform rating and maintaining a price target of $73.00. Trading at $56.97, the stock has strong backing from Wall Street, with an exceptionally bullish analyst consensus rating of 1.25 according to InvestingPro data. The firm’s analysts highlighted the company’s strong performance in the first quarter of 2025, crediting its success to a strategic focus on servicing the top one-third of independent restaurants. This approach has led to nearly 9% top-line growth for the quarter, surpassing BMO’s projections, despite a deliberate reduction in customer numbers that impacted sales by 0.7%. The company’s center-of-plate sales volume was down by approximately 4%, which translates to an underlying growth of about 3%.

Inflation rates stood at around 5%, slightly exceeding BMO’s anticipation of 3%. However, this was offset by favorable sales mix-shift effects, particularly from effective cross-selling initiatives with Hardies in Texas. BMO’s forecasts for The Chefs’ Warehouse’s top-line growth from the second to the fourth quarter of 2025 remain at approximately 6%. While conservative, the firm regards this estimate as judicious. Additionally, EBITDA forecasts are kept at the upper end of the company’s guidance.

BMO analysts noted that despite recent stock market fluctuations and a reported decline in international tourism to the United States, The Chefs’ Warehouse’s management has largely allayed concerns about demand trends within its customer base. The company’s resilience is reflected in its solid financial health, with InvestingPro data showing a healthy current ratio of 2.04 and impressive revenue growth of 10.5% over the last twelve months. This is with the exception of certain areas, such as Las Vegas. The company’s post-pandemic diversification into suburban areas less dependent on tourism has contributed to its resilience. The Chefs’ Warehouse also reported a strong start to its country club business and a solid performance in the cruise line sector.

BMO Capital Markets considers The Chefs’ Warehouse a top small-cap pick for 2025. The $73 price target is based on an approximated 12.5x EV/EBITDA multiple of the firm’s projected $272 million EBITDA for fiscal year 2026. The stock has demonstrated remarkable momentum, with InvestingPro reporting a 61% return over the past year and 33% growth in the last six months. However, investors should note that according to InvestingPro’s Fair Value analysis, the stock appears overvalued at current levels. For deeper insights into CHEF’s valuation and 8 additional exclusive ProTips, explore the comprehensive Pro Research Report available on InvestingPro. The Chefs’ Warehouse’s leverage is estimated at 2.4x when considering the 2025 EBITDA forecast and including finance leases. The company anticipates maintaining a leverage ratio between 2.3x and 2.6x in the near term.

In other recent news, The Chefs Warehouse Inc. reported a strong start to 2025 with first-quarter earnings that exceeded Wall Street expectations. The company posted an earnings per share (EPS) of $0.25, surpassing the forecasted $0.20, and achieved revenue of $950.7 million, beating the anticipated $927.34 million. This impressive performance reflects an 8.7% increase in net sales year-over-year, driven by a 10.7% rise in specialty sales. The company’s strategic focus on digital expansion and operational efficiency contributed significantly to its success. In terms of market reactions, the positive earnings report led to a 6.23% increase in the company’s stock price during pre-market trading. Looking ahead, Chefs Warehouse forecasts net sales between $3.96 billion and $4.04 billion for the full year 2025, with a gross profit range of $954 million to $976 million. Despite potential challenges like inflationary pressures and supply chain issues, the company remains cautiously optimistic about its growth prospects.

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