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Investing.com - Guggenheim raised its price target on Sysco (NYSE:SYY) to $85.00 from $82.00 on Thursday, while maintaining a Buy rating on the $38.25 billion food service distribution company. According to InvestingPro data, Sysco currently trades at $80.11, near its 52-week high of $82.23.
The price target increase follows what Guggenheim described as a "healthy, broad-based" fourth-quarter earnings beat, despite the stock underperforming by 300 basis points due to below-consensus initial fiscal 2026 guidance. InvestingPro analysis suggests the stock is currently undervalued, with 4 analysts recently revising their earnings expectations upward.
Guggenheim noted that incentive compensation normalization is creating a drag on Sysco’s profit outlook following challenging years, an element that wasn’t previously highlighted as a positive factor in fiscal 2025.
The research firm expressed encouragement about "clear progress towards twin inflection points" in Sysco’s U.S. business, with local cases declining by less than 1% and gross margin returning to expansion, which it considers necessary elements to restore investor confidence in the company’s 6-8% earnings algorithm.
Guggenheim maintained its Buy rating based on Sysco shares trading at what it called a "historically modest EBITDA multiple" of 10.6x its fiscal 2026 estimate, though it cautioned that the "modest 2026 profit re-set will probably postpone the share price recovery." The company maintains a strong dividend track record, having raised dividends for 9 consecutive years, with InvestingPro showing an impressive 55-year streak of consistent dividend payments.
In other recent news, Sysco reported its fourth-quarter 2025 earnings, surpassing Wall Street expectations with an adjusted earnings per share of $1.48, compared to the forecasted $1.39. The company also exceeded revenue projections, reporting $21.14 billion against the anticipated $21 billion. Following these results, Barclays (LON:BARC) raised its price target for Sysco to $82 from $77, citing improved U.S. local case growth and earnings per share. Truist Securities also adjusted its price target to $90, highlighting better-than-expected sales and adjusted EBITDA performance, despite lower-than-expected guidance for fiscal year 2026.
UBS, while noting one-time issues affecting Sysco’s guidance, lowered its price target slightly to $90 from $91 but maintained a Buy rating, acknowledging signs of progress in the company’s fourth-quarter results. These developments reflect a mixed but generally positive outlook from analysts on Sysco’s performance and potential. The company’s ability to surpass earnings and revenue estimates has been a key focus, although future guidance remains a concern for some investors.
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