Stifel maintains Buy rating on Post Holdings stock after acquisition

On Wednesday, Stifel analysts reiterated their Buy rating and maintained a $130 price target for Post Holdings stock (NYSE: NYSE:POST), which currently trades at a P/E ratio of 17.8x. This decision follows Post Holdings’ acquisition of 8th Avenue, which expands its portfolio in granola, fruits/nuts, branded pasta, and nut butters. According to InvestingPro analysis, the company appears undervalued based on its Fair Value estimates.

The acquisition enhances Post’s private label and branded offerings, a move viewed positively by Stifel analysts. Post Holdings had previously monetized this business in 2018 but retained a 60.5% equity stake. With current EBITDA of $1.3 billion and a strong current ratio of 2.13, the company maintains robust financial health, earning a "GOOD" rating from InvestingPro. The acquisition is expected to improve EBITDA stability and contribute to free cash flow, supporting Post’s strategic capital allocation.

In light of the acquisition, Post Holdings has increased its fiscal year 2025 guidance by $30 million. This adjustment reflects the anticipated contribution from 8th Avenue’s operations. Stifel analysts have also raised their estimates for fiscal years 2025 and 2026.

The acquisition and revised guidance underscore Post Holdings’ strategic growth initiatives and its focus on expanding its market presence in key product categories.

In other recent news, Post Holdings reported its second-quarter earnings for 2025, exceeding expectations with an earnings per share (EPS) of $1.41, compared to the forecasted $1.19. However, the company’s revenue of $1.95 billion fell short of the anticipated $1.99 billion. Despite the revenue miss, Post Holdings revised its adjusted EBITDA guidance upwards to a range of $1.430-$1.470 billion for the year. The company continues to focus on cost management and innovation amid challenging market conditions.

Additionally, Post Holdings announced its acquisition of 8th Avenue Food & Provisions for $880 million, which includes $111 million in finance leases. This acquisition is expected to add approximately $1 billion in annual revenue, increasing Post’s pro forma sales to around $9 billion. Evercore ISI analysts raised Post Holdings’ stock price target to $131 from $130, maintaining an Outperform rating, anticipating a positive impact on the company’s financial performance. Moody’s Ratings confirmed that Post Holdings’ ratings remain stable following the acquisition announcement.

Post Holdings plans to fund the purchase with cash on hand and borrowings from its revolving credit facility, with the deal expected to close on July 1, 2025. The acquisition is strategically beneficial, as 8th Avenue serves as the co-packer for Post’s Peter Pan peanut butter brand and complements its cereal portfolio. Despite recent challenges faced by 8th Avenue, the acquisition is expected to diversify Post Holdings’ portfolio across various retail and foodservice categories.

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