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Investing.com - Bernstein SocGen Group has reiterated an Outperform rating on US Foods (NYSE:USFD) with a price target of $95.00, citing the company’s solid cost management and strong independent volumes. The $95 target represents significant upside from the current price of $71.40, with InvestingPro data showing analyst consensus is strongly bullish at 1.38 (1.0 being "Strong Buy"). Notably, analysts have set targets ranging from $82 to $102, suggesting potential upside of up to 33%.
US Foods reported revenue growth of 4.8%, supported by above-expectations independent case growth of 3.9%, although total case growth remained more muted at 1.1% with chain restaurants experiencing continued decline. This growth aligns perfectly with the company’s last twelve months revenue of $39.12 billion. However, InvestingPro data reveals the company suffers from weak gross profit margins of 17.41%, a potential concern for investors tracking this prominent player in the Consumer Staples Distribution sector.
The company has updated its fiscal year 2025 guidance, demonstrating its ability to maintain robust growth trajectory despite challenging macroeconomic conditions, while finding cost leverage across multiple areas of the business. Analysts predict EPS of $4.01 for FY2025, with the company already proving profitable with diluted EPS of $2.38 over the last twelve months.
Bernstein highlighted several positive developments, including the expansion of Pronto in three new markets with higher penetration, increased vendor management savings from $110 million to $120 million, and progress on the Descartes route optimization tool, which improved cases per mile by 2.3% year-over-year. These operational improvements have contributed to solid financial metrics, with InvestingPro data showing strong returns on equity (12%) and invested capital (10%). Management has also been aggressively buying back shares, one of several key insights available in the comprehensive Pro Research Report for US Foods.
The research firm expressed confidence that US Foods will meet its updated FY25 guidance and remain on track for its long-term algorithm, maintaining a positive outlook with a $95 price target representing a 2:1 risk-reward ratio. While the company’s P/E ratio stands at 31.08 and its PEG ratio at 2.69 (indicating it’s trading at a high P/E relative to near-term earnings growth), the stock has delivered a 7.27% total return over the past year and appears slightly undervalued according to InvestingPro’s Fair Value assessment.
In other recent news, U.S. Foods Holding Corp reported its third-quarter 2025 earnings, which surpassed analyst expectations. The company achieved an adjusted earnings per share (EPS) of $1.07, exceeding the forecasted $1.03. Revenue also slightly outperformed predictions, reaching $10.19 billion compared to the expected $10.18 billion. These results highlight a positive performance for the quarter. Despite these achievements, the company’s stock experienced a minor pre-market decline. The financial results reflect the company’s efforts to maintain growth and operational efficiency. Investors may note the company’s ability to meet and exceed market expectations in both earnings and revenue.
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