BofA update shows where active managers are putting money
On Tuesday, Canaccord Genuity began coverage on Premium Brands Holdings Corp . (TSX:PBH:CN) (OTC:PRBZF), issuing a Buy rating and setting a price target of C$100.00. The firm’s analyst cited the company’s potential for high single-digit organic growth in its Specialty Foods business and mid-single-digit growth in its Premium Foods Distribution segment.
Premium Brands Holdings Corp., a diversified food company, has been recognized for its three distinct platforms within the Specialty Foods sector, including Protein, Sandwich, Bakery & Culinary, and its two platforms within the Premium Foods Distribution segment, Distribution and Seafood. The analyst noted that despite a recent slowdown in consumer spending and sales challenges with a major foodservice customer, there are indications of a recovery on the horizon.
The company experienced a period of heavy capital expenditure from 2022 to 2024, which impacted its financial results. The 2024 results did not meet expectations due to these factors. However, Canaccord Genuity’s analysis suggests that Premium Brands is now positioned to significantly reduce debt and improve its return on invested capital (ROIC).
The anticipated improvement in ROIC and the process of deleveraging are expected to contribute to a re-rating of the company’s stock, which has been trading at five-year lows. The firm’s outlook is based on the belief that the end of the capital expenditure cycle and the emerging signs of recovery will provide a solid foundation for growth and value creation for Premium Brands Holdings Corp. in the near future.
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