On Monday, BMO (TSX:BMO) Capital Markets adjusted its outlook on United Natural Foods , Inc. (NYSE:UNFI), a leading distributor of natural and organic foods, specialty foods, and related products in the United States and Canada. The firm's analyst reduced the price target on the company's stock to $12.00, down from the previous $13.00 while maintaining a Market Perform rating.
The price target revision reflects the analyst's assessment of the company's ongoing expense reduction initiatives, which are said to bolster United Natural Foods' adjusted EBITDA.
However, the analyst noted that despite these efforts, the company faces structural challenges within its core customer base. These challenges are further compounded by a shift in promotional and vendor support dollars towards retail media.
The analyst's commentary included a conservative forecast for the company's gross margin percentage in the second half of the fiscal year. It was suggested that United Natural Foods may need to implement deeper expense reductions to meet its financial guidance.
The Market Perform rating stays in place, with the new price target of $12.00 representing approximately 5.5 times the firm's forecasted fiscal year 2025 EBITDA for United Natural Foods.
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