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On Thursday, Morgan Stanley (NYSE:MS) raised its price target on shares of Performance Food Group (NYSE:PFGC) to $93 from the previous $92, while maintaining an Equalweight rating on the stock. With the stock currently trading at $89.01 and analyst targets ranging from $85.34 to $121, InvestingPro analysis suggests the stock is currently trading above its Fair Value. Analysts at the firm highlighted the company’s consistent strategy and alignment with new financial targets that slightly exceed the Street consensus. They noted that the updated targets are not overly ambitious and assume a generally resilient macroeconomic environment, contributing to a modestly positive reaction in the stock.
Performance Food Group’s investor day presentation underscored the company’s decade-long consistency in executing its strategy. With a market capitalization of $13.89 billion and revenue growth of 7.2% over the last twelve months, the company has demonstrated strong momentum. The new financial targets set by PFGC are slightly above the consensus estimates of Stifel analysts, indicating a potential narrowing of the valuation gap between PFGC and its competitor US Foods Holding Corp . (NYSE:USFD). The gap was attributed in part to differences in the companies’ most recent quarterly performances.
The company’s broader strategy includes driving strong independent growth, accelerating foodservice expansion into the convenience channel, and shifting towards a more favorable product and customer mix. Operational efficiencies and increased procurement are also part of the plan, alongside a potential increase in stock buybacks, which may be influenced by future mergers and acquisitions (M&A) activity.
PFGC provided detailed insights into its customer and product mix, outlining the opportunities ahead. While the company’s plan does not include aggressive organic expansion, it acknowledges the potential for geographic and customer base expansion, particularly in areas where non-restaurant customers are currently underrepresented compared to its main peers. Analysts believe M&A will likely be a driver for this expansion, given PFGC’s strong track record in this area.
In light of the company’s new goals, Morgan Stanley has modestly increased its estimates for Performance Food Group, maintaining the same multiple but allowing for the possibility of a higher number over time. The company’s plan to continue leveraging operational and procurement efficiencies, along with favorable market conditions, supports the updated price target.
In other recent news, Performance Food Group (PFG) reported its third-quarter earnings for 2025, revealing a shortfall in earnings per share (EPS) expectations. The company posted an adjusted EPS of $0.79, which was below the anticipated $0.89, and revenue came in at $15.31 billion, slightly missing the forecast of $15.35 billion. Despite the earnings miss, the company experienced a 10.5% increase in net sales for the quarter. Additionally, Performance Food Group announced a new share repurchase program, authorizing the buyback of up to $500 million of common stock, replacing the previous $300 million program.
Looking forward, the company maintained its fiscal 2025 net sales forecast of $63 billion to $63.5 billion, with Adjusted EBITDA expected to be between $1.725 billion and $1.75 billion. The company also projects significant growth by fiscal 2028, with annual sales anticipated to reach between $73 billion and $75 billion. Meanwhile, Citi analysts have reaffirmed their Buy rating on Performance Food Group, with a price target of $121.00, citing potential upside from ongoing mix shifts within the company’s operations.
Citi’s analysis highlighted the acceleration in gross margin gains within the core foodservice segment and beneficial changes in the Convenience segment, such as a decrease in low-margin product sales. The firm’s confidence in Performance Food Group’s strategy and financial outlook aligns with the company’s continued navigation of the evolving foodservice landscape. These developments reflect Performance Food Group’s strategic focus on growth and market positioning amidst a challenging economic environment.
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