United Natural Foods stock rating upgraded by CFRA after cyber incident

Investing.com - CFRA upgraded United Natural Foods (NYSE:UNFI) from Hold to Buy and raised its price target to $32.00 from $24.00 following the company’s cybersecurity incident update. The food distributor, currently trading near InvestingPro’s Fair Value estimate, has shown resilience with its stock price up over 73% in the past year.

The food distributor reported that its recent cybersecurity issue has been resolved, with operations returning to more normalized levels. The financial impact was limited to the fourth fiscal quarter ending in July and was less severe than initially feared.

United Natural Foods now expects fiscal year 2025 adjusted EBITDA of $535 million to $565 million, only about $15 million below its previous outlook. This guidance excludes approximately $25 million in direct cyber-related costs.

CFRA calculated its new price target using a 6.0x EV/EBITDA multiple against its fiscal year 2026 adjusted EBITDA estimate of $595 million, up from its previous estimate of $587 million. The firm also raised its fiscal year 2025 earnings per share forecast to $0.51 from $0.22.

The research firm expressed encouragement about the underlying business momentum and management’s plan to reduce leverage to 2.5x by fiscal year 2026, compared to approximately 3.4x expected in fiscal year 2025.

In other recent news, United Natural Foods, Inc. (UNFI) has adjusted its fiscal 2025 outlook following a cyber incident. The company anticipates a reduction in net sales by approximately $350 to $400 million and a hit to net income by $50 to $60 million due to the incident. Despite this, UNFI projects net sales for the year to be between $31.6 billion and $31.8 billion, marking a 2.3% increase from the previous year. The company reported strong performance in the first three quarters of fiscal 2025, with a 5.5% increase in net sales and a 16% rise in adjusted EBITDA. UBS and Jefferies both lowered their price targets for UNFI to $26, citing the cyber attack’s potential impact on customer retention and earnings outlook. The company has successfully contained the unauthorized activity on its IT systems, restoring core business operations and ensuring no personal or protected health information was compromised. UNFI maintains that its cybersecurity insurance coverage is adequate, although the full claim process will extend into fiscal year 2026.

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