On Monday, Truist Securities revised its price target for Sysco Corporation (NYSE:SYY), a global leader in selling, marketing, and distributing food products, to $85.00, down from the previous target of $87.00. Despite the reduction, the firm has kept its Buy rating on the stock.
The adjustment follows a detailed review of Sysco's financial estimates, specifically concerning adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization). The analyst at Truist Securities identified an overstatement in previous calculations, where acquisition-related depreciation and amortization (D&A) were inadvertently accounted for twice. This realization prompted a correction in the forecasted financial figures.
Sysco's adjusted operating income has been recalculated to reflect the proper treatment of acquisition D&A. As a result, the updated forecast for the company's adjusted EBITDA now stands at $4.193 billion for fiscal year 2024 and $4.432 billion for fiscal year 2025. These figures are revised downwards from the earlier estimates of $4.234 billion and $4.596 billion, respectively.
The earnings per share (EPS) estimates, however, remain unchanged at $4.30 for fiscal year 2024 and $4.56 for fiscal year 2025. The rationale behind maintaining these estimates was not elaborated upon in the update.
The new $85.00 price target is based on a 12 times multiple of the company's projected 2025 enterprise value to EBITDA ratio, according to the analyst's valuation model. This valuation reflects the firm's confidence in Sysco's ongoing business performance despite the adjustments made to the financial projections.
In other recent news, Sysco Corporation has been the subject of varying analyst feedback.
Deutsche Bank maintained its Buy rating on Sysco stock, emphasizing the company's focus on top-line growth and potential for future performance. This followed a series of investor meetings that reinforced confidence in Sysco's long-term strategy.
Similarly, Guggenheim Securities upgraded Sysco stock from Neutral to Buy, highlighting the company's strategic investments and potential for significant return. Guggenheim's projections for Sysco's 2027 sales and EBITDA are $92 billion and $5.2 billion, respectively.
Conversely, BMO Capital reduced its price target for Sysco from $90 to $85, maintaining an Outperform rating on the stock. The firm referenced Sysco's financial goals for fiscal years 2025 to 2027, which aim for 6-8% growth in adjusted EBIT and EPS. UBS reiterated its Buy rating on Sysco with a price target of $87.00, expressing optimism about Sysco's growth potential.
Lastly, Truist Securities revised its price target for Sysco to $87.00, a decrease from the previous target of $91.00, following Sysco's third fiscal quarter of 2024 results, which revealed a miss in both sales and adjusted EBITDA. Despite the adjustment, the firm maintained a Buy rating on the stock.
These are all recent developments in the financial analysis of Sysco Corporation.
InvestingPro Insights
Following the recent price target revision by Truist Securities for Sysco Corporation (NYSE:SYY), insights from InvestingPro provide additional context to the company's financial health and market position. Sysco, recognized as a prominent player in the Consumer Staples Distribution & Retail industry, is trading at a P/E ratio of 17.74, which is considered low relative to near-term earnings growth. This aligns with the analyst's confidence in Sysco's ongoing business performance despite the adjustments made to the financial projections.
InvestingPro data indicates that Sysco has a market capitalization of $36.53 billion and has maintained a steady revenue growth of 3.26% over the last twelve months as of Q3 2024. Furthermore, the company has demonstrated a strong commitment to returning value to shareholders, having raised its dividend for 8 consecutive years and maintained dividend payments for 54 consecutive years.
For investors seeking deeper insights, InvestingPro offers additional analyses and metrics, including 6 more InvestingPro Tips for Sysco, which can be accessed through the dedicated page at Investing.com/pro/SYY. Additionally, users can utilize the coupon code PRONEWS24 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription, providing a comprehensive toolset for informed investment decisions.
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